We report optically bistable output of a vertical-cavity surface-emitting laser (VCSEL). The GaAs-AlGaAs VCSEL was optically pumped with a cw Ti:sapphire laser that was tuned near a cavity resonance of the VCSEL. Using a simple Fabry-Perot model, we demonstrate that the bistability is primarily dispersive and not absorptive. Although the threshold power is high because of poor sample quality, the contrast is very large; in fact, it approaches infinity. (C) 1997 Optical Society of America [S0740-3224(97)00109-4].