Reduction of threshold current in GaAs/AlGaAs patterned quantum well (PQW) lasers grown by molecular beam epitaxy is studied. Application of high reflection coating results in threshold currents as low as 0.35 mA. Dependence of the measured threshold currents on the optical cavity losses agrees well with a simple model accounting for gain saturation in the quantum well active region. It is shown that gain saturation and finite optical confinement in the lateral direction lead to a minimum in the threshold current for an optimal width of the optical waveguide. Threshold currents as low as ∼100 μA are predicted for PQW lasers with ∼0.2-μm-wide active regions.