An AlInAs-oxide current-confinement structure was introduced into a III–V/Si-on-insulator (SOI) hybrid laser for realizing an efficient light source composed of III–V/Si hybrid photonic integrated circuits. Lasing of the hybrid Fabry–Pérot laser was confirmed after introduction of the confinement structure providing both optical and electrical confinement. We determined the lasing characteristics of the designed hybrid laser, which showed a low threshold current and high external differential quantum efficiency comparable to that of conventional lasers fabricated on III–V compound semiconductor wafers. Comparison of the photoluminescence spectra of the III–V/SOI hybrid wafers before and after the process proved that oxidation had no influence on the active layer. The threshold current and external differential quantum efficiency of the fabricated laser with a stripe width of 4.5 µm and cavity length of 500 µm were obtained as 50 mA and 11%/facet, respectively.