In this Letter, a new kind of active optical bistability is discussed. The basic principle underlying the operation of the optically bistable laser is based on stable-unstable cavity configuration transitions of an active optical resonator. Generally speaking, a laser system showing both pump- and laser-induced lensing (focusing or defocusing) effects may display such a hysteresis loop in its input-output characteristics. This bistability is experimentally demonstrated using a flashlamp-pumped, Nd-doped gadolinium gallium garnet rod placed in a plane-parallel optical cavity.