The coherent manipulation of quantum states is one of the main tasks required in quantum computation, and the understanding of the decoherence which prevent this manipulation is essential. Here we develop a model to describe the Rabi oscillations observed in a quantum-dot photodiode. We use a multi-level density matrix formulation, which includes multi-exciton, single particle, and wetting layer states. We demonstrate that the damping observed in recent experiments is the result of a non-resonant excitation from or to the continuum of the wetting layer states. (c) 2004 Elsevier Ltd. All rights reserved.