This paper investigates the influence of gain compression factor on the modulation response of InGaAs/GaAs self-assembled quantum dot laser based on rate equations. For different gain compression factors the output power-current characteristics, light emissions of quantum dot laser have been simulated and effect of gain compression factor changes on quantum dot laser is illustrated. Also, small and large-signal response of quantum dot lasers is studied and the impact of the gain compression factor is presented. It explains that increase of gain compression factor, decreases small-signal modulation characteristics, nevertheless, improves large-signal response of quantum dot lasers. It helps to generate better laser signal quality, higher eye and smaller jitter. The large-signal behavior of a laser diode determines its capability for digital data transfer. The modulation speed of quantum dot lasers is of specific importance if such lasers are considered for optical communication systems.