A novel structure of high electro-optic conversion efficiency semiconductor laser with composite waveguide was presented. Because of the AlxGa1-xAs waveguide layer with Al component step distribution, the electro-optic conversion efficiency of the device was high. Due to the optimal design of distribution of resistivity and band, the series resistance of the semiconductor laser was reduced while resulting in the improvement of electro-optic conversion efficiency without reducing the optical power. Based on the theoretical analysis and software simulation, the mechanism of the electro-optic conversion efficiency of the composite waveguide was analyzed. In the condition that the laser width was 6 μm and the cavity length was about 1 000 μm, the material composition distribution was optimized, and a step of the composite waveguide laser could achieve maximum electro-optical conversion efficiency. The results show that the series resistance of the semiconductor laser with composite waveguide is reduced from 3.51 Ω of the conventional laser structure with conventional waveguide to 2.67 Ω, and the electro-optic conversion efficiency is increased from 54.7% to 69.5% at 900 mA.