A laser diode control circuit maintains a desired average output power of the laser diode by detecting the optical output, amplifying the detected output, and controlling a bias current of the laser diode accordingly. A pilot tone is combined with the detected output and amplified therewith, and the amplified level of the tone is detected and used to control a modulation current for the laser diode. In one described arrangement the laser diode is controlled to have a high extinction ratio with the bias current at the knee of the diode's characteristic curve, and in another arrangement a lower extinction ratio is provided with the bias current above the knee.