We have demonstrated a deformed octagonal microcavity semiconductor laser with manipulated lasing modes for bistable operation and direct modulation. There are two sets of degenerated four-bounced modes, S01 and S02, in the octagonal microcavity, and the degeneracy between them is broken by introducing a square hole into the center of the cavity. In the deformed octagonal microcavity laser, mode S01 dominates the lasing process during the current rising process. However, mode S02 also lases when the current decreases and interacts nonlinearly with S01, which is caused by the non-uniform distribution of the refractive index induced by the square-ring-shaped current injection. We observe a counterclockwise bistable hysteresis loop with continuous injection current ranging from 31 to 13 mA at 288 K. We also study the small-signal modulation response of the laser at high and low states with different injection currents. By utilizing the photon-photon resonance effect between modes S01 and S02, we effectively increased the 3-dB bandwidth of the laser from 12 GHz to 16.2 GHz.