SUMMARYThe TLM-based FDTD method is extended to the modelling of optical bistability caused by the saturable Kerr-e!ect of a GaAs}GaAsAl multiple quantum well (MQW) like medium. This structure is one of the possible candidates to be used as an all-optical switch in high-speed communication systems. The purpose of this paper is to demonstrate the capability of the TLM-based FDTD method in handling the non-linear medium problems, by performing a time-domain simulation starting from the basic equations that represent the problem. A recursive formulation is derived to account for the saturable Kerr properties of the material and a physically realizable Fabry}Perot cavity is simulated. The numerical results con"rm the e!ectiveness of the TLM-based FDTD method for bistability modelling, and thus provide the foundations for further work and the simulation of more complicated and realistic bistable structures promising for high-speed all-optical digital signal processing.