Abstract.A density-matrix approach combined with time-dependent density-functional theory is used to calculate the intersubband photoabsorption in a strongly driven, DC-biased GaAs/AlGaAs single quantum well. For certain frequencies and intensities of the driving field, optical bistability is observed. Compared to a full time propagation of the density matrix, the commonly used two-level rotating wave approximation becomes less and less accurate for increasing asymmetry.Intersubband (ISB) transitions in semiconductor quantum wells take place on a meV energy scale and are therefore attractive for THz device applications [1]. Nonlinear ISB dynamics has attracted particular attention, and many interesting effects have been studied: secondand third-harmonic generation [2], intensity-dependent saturation of photoabsorption [3,4], directional control over photocurrents [5], generation of ultrashort THz pulses [6], plasma instability [7], or optical bistability [8,9]. Inspired by the photoabsorption experiments by Craig et al.[4], we have recently performed a theoretical study of the optical bistability region in a strongly driven, modulation n-doped GaAs/Al 0 3 Ga 0 7 As quantum well [10]. We have demonstrated that ISB bistability can be manipulated on a picosecond time scale by short THz control pulses. This opens up new opportunities for experimental study of optical bistability, which in the long run may lead to new THz applications such as high-speed all-optical modulators and switches.Most previous theoretical studies of nonlinear ISB dynamics were based on the semiconductor Bloch equations (SBE) in or exchange-only [14]- [16] approximation. These studies showed that the collective ISB electron dynamics is strongly influenced by depolarization and exchange-correlation (xc) manybody effects. We account for these effects using timedependent density-functional theory, which has the advantage of formal and computational simplicity.The present study deals with a popular simplification of the ISB SBE: the 2-level rotating-wave approximation (RWA) [11]-[13], which was used by Za użny [11] to derive analytical expressions for nonlinear ISB photoabsorption. The 2-level RWA works well for symmetric quantum wells, but we will demonstrate numerically that it breaks down when the system becomes asymmetric under the influence of DC electric fields.