A new formulation of the perfectly matched layer (PML) for the semivectorial finite-difference time-domain (FDTD) method in optical waveguide simulation is presented by incorporating the infinite-impulse response (IIR) digital filter technique. The complex frequency-shifted PML is implemented through Z transformation, where the second-order derivatives in semivectorial FDTD are realized by two cascaded first-order recursive IIR digital filters. The numerical examples indicate that the new scheme has better performance compared with the normal PML.