With advances in nanofabrication techniques leading to ever smaller and more intricate semiconductor laser structures, a detailed understanding of the electrodynamics of these micron-scale devices is required in order to optimize their design. The finite difference time domain (FD-TD) Maxwell's equations solver holds much promise for providing highly realistic simulations of novel microcavity lasers. We have extended the FD-TD algorithm to include the effects of frequency-dependent gain and gain saturation. This approach and its application to the modeling of distributed Bragg reflector microlasers is presented. ¿ American Geophysical Union 1996