Highly efficient ridge waveguide pseudomorphic single quantum well lasers, emitting at 980 nm, have been fabricated from an In0.2Ga0.8As/GaAs/AlGaAs graded-index separate confinement heterostructure grown by molecular beam epitaxy. The lateral index guiding provided by the ridge reduces the anomalously large lateral loss of optical power found in gain-guided structures, thereby reducing the internal loss by more than 50%. The low threshold current (7.6 mA) and high differential quantum efficiency (79%) obtained under continuous operation as well as the transparency of the GaAs substrate to the emitted radiation render these lasers attractive for GaAs-based optoelectronic integration.