An integrated InP-InGaAsP two-state coupled-laser device for use in optical packet switching and signal processing is presented. The two states are identified by distinct lasing wavelengths. Single-mode lasing occurs in both states and the contrast ratio between the two states is 35 dB. Switching between states with optical pulses is demonstrated. The use of an arrayed waveguide grating (AWG) and ring laser configuration permits monolithic integration without the need for cleaved facets. How the AWG can be used to obtain partial isolation between multiple interconnected devices is also discussed.