A dual-mode optical device selectively operative in signal generation and amplification modes is disclosed herein. The dual-mode device includes a body of semiconductor material having opposed from and rear facets. During operation in the amplification mode, light is input through the front facet and is amplified within the body of the optical gain material. An at least partially optically reflective surface is positioned a first predetermined distance from one of the facets during operation of the device in the amplification mode. In the signal generation mode, the at least partially optically reflective surface is positioned a second predetermined distance from the one facet so as to induce optical oscillation within the body of semiconductor material. In a preferred implementation, a semiconductor diode laser having opposed first and second facets is utilized as an optical source. An at least partially optically reflective surface is positioned a predetermined distance from one of the first and second facets in order that a resonant cavity is formed therebetween. The predetermined distance between the at least partially optically reflective surface and the one facet may be modulated, thereby allowing modulation of optical output produced by the semiconductor diode laser.