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Abstract: The emission characteristics of a vertical-cavity surface-emitting laser (VCSEL) operated in a single-transverse mode and coupled to an external cavity with a diffraction grating as a frequency-selective element are analyzed experimentally, numerically and analytically. The experiments yield a rather abrupt turn-on of the VCSEL to a high-amplitude emission state and hysteresis phenomena. The experimental results are explained by numerical simulations and analytical calculations demonstrating the possibility of bistability between lasing and non-lasing states close to threshold. Hence, the scheme might be useful in all-optical photonic switching applications. A detailed bifurcation analysis near threshold is given by superimposing the numerical results with analytical steady-state curves. The mode selection and switching behavior obtained in the simulations can be interpreted from the point of view of the preference of states with the minimal total losses. [Copyright &y& Elsevier]