A modulation drive current control loop for a digitally modulated laser diode uses the small signal, square-law portion of an RF signal diode detection circuit to adjust the magnitude of laser modulation drive current, and compensate for variations in temperature and aging of the laser diode. Operating the RF signal detector diode as a non-switched device, in its square-law region, provides several advantages over large signal, switched, linear region devices. When a detector diode is operated in the large signal, switched, linear region, its output depends upon the reduced slope beyond the `knee` region of the curve, so that the diode functions essentially as a switch. In such a large signal detection mode, the diode conducts during only a portion of the input cycle, with its output voltage following peaks of the input signal waveform in accordance with a linear relationship between input voltage and output voltage. This requirement for both a large valued input signal (to overcome the bandgap voltage of the diode) and the need to switch the detector diode on and off necessarily prevents its use with precision at very high (e.g., gigabit) data rates. In contrast therewith, the small signal, square-low detector diode of the present invention can easily produce a proportional output voltage at gigabit speeds using a very small amplitude input signal.