A type of AlGaAs/GaAs-based vertical-cavity surface-emitting laser is demonstrated that creates a strongly-confined optical mode in an all-epitaxial heterostructure. The mode-confining region in this monolithic device is due to a lithographically defined intracavity phase-shifting layer. Analysis shows that the optical loss in the device can be less than for oxide-confinement. (C) 2004 American Institute of Physics.