PACS 71.35.-y -Excitons and related phenomena PACS 78.47.+p -Time-resolved optical spectroscopies and other ultrafast optical measurements in condensed matter PACS 42.65.Sf -Dynamics of nonlinear optical systems; optical instabilities, optical chaos and complexity, and optical spatio-temporal dynamicsAbstract.-Based on a microscopic many-particle theory, we predict large optical gain in the probe and background-free four-wave mixing directions caused by excitonic instabilities in semiconductor quantum wells. For a single quantum well with radiative-decay limited dephasing in a typical pump-probe setup we discuss the microscopic driving mechanisms and polarization and frequency dependence of these instabilities.In gaseous atomic or molecular systems and simple Kerr media, four-wave mixing (FWM) processes lead, among other things, to transverse optical instabilities (e.g., refs. [1][2][3][4][5]). The interest in these FWM instabilities has recently been renewed by the demonstration of their effectiveness for all-optical switching at very low light intensities [6,7]. In this Letter we argue on the basis of a microscopic many-particle analysis that FWM instabilities can occur via nonlinear excitonic processes in a single semiconductor quantum well (QW). Instead of studying spontaneous off-axis pattern formation induced by these instabilities, we investigate their role in a pumpprobe setup as illustrated in fig. 1. We find that the FWM instabilities can lead to large gain in the probe and (background-free) FWM directions that grows exponentially with the pump pulse duration, limited by the eventual buildup of incoherent exciton/biexciton densities. Our analysis shows that the materials conditions for observing these instability-induced gains, though quite stringent, appear to be obtainable in currently available highquality QW samples.FWM has been widely used in studies of microscopic processes in QWs (e.g.,). An example of FWM driven instabilities in semiconductors is the parametric amplification of exciton polaritons in planar QW microcavities [16][17][18][19][20][21][22][23]. In contrast to the microcavity, we focus on the "simple" system of a single QW. Using a microscopic many-particle theory we give a comprehensive stability analysis of the optical polarization field in- duced by a normally incident pump beam, treating all vectorial polarization state channels. In atomic systems, phase-space filling (PSF) nonlinearities drive the instabilities, and in microcavities it is the interaction between cocircularly (say, ++) polarized polaritons, related to the Hartree-Fock (HF) interaction and two-exciton (++) correlations [21][22][23]. We find that neither PSF nor excitonic interactions in the ++ channel are promising for instabilities in single QWs, mainly because of excessive excitationinduced dephasing (EID). Instead we show that instabilities and large probe gains can be produced in single QWs by virtual biexciton formation, which requires the pump to