The valence subband structures, density-of-states, and optical gain of (0001) wurtzite InxGa12xN/GaN quantum wells (QWs) are studied using a numerical approach. We used the effective-mass parameters of GaN and InN derived using the empirical pseudopotential method. By varying the well width and mole fraction of In in the well material, the effects of quantum confinement and compressive strain are examined. A narrower well width and a higher In mole fraction in the well lead to transverse electric enhancement and transverse magnetic suppression of the optical gain. From the relationship between the optical gain and the radiative current density, we obtain the transparent current density for a single QW to be 200 A/cm2. The InGaN/GaN/AlGaN separate confinement heterostructure multiple QW (MQW) laser structure is then analyzed. It is shown that a suitable combination of well width and number of QWs should be selected in optimizing the threshold current density in such MQW lasers.