We present a full-vector Maxwell equation solver for the analysis of vertical-cavity surface-emitting lasers (VCSELs) with circular symmetry using the finite-difference time-domain (FDTD) method We apply this model to the air-post index-guided 1.55 mu m VCSEL structure, and determine the resonant wavelengths and the quality factor for elected lowest order modes. The results of this study enable quantitative and qualitative descriptions of the transverse-mode competition and emission spectra of VCSELs. (C) 1998 John Wiley & Sons, Inc.