The ground-state (GS) exciton transition is revealed in optical reflectance and photoluminescence (PL) spectra of structures with multiple sheets of nanoscale islands formed by submonolayer CdSe insertions in a ZnMgSSe matrix. The GS transition is absent, however, in the PL excitation (PLE) spectra, demonstrating a typical quantum dot-like PLE behavior. High exciton oscillator strength and lifted k-selection rule caused by exciton confinement permits room temperature zero-phonon lasing (460 nm) resonant to the spectral region of exciton-induced refractive index (n) enhancement without using thick cladding layers having a lower n. (C) 1998 Published by Elsevier Science B.V. All rights reserved.