An improved analytical two dimensional (2-D) model for AlGaN/GaN modulation doped field effect transistor (MODFET) has been developed. The model is based on the solution of 2-D Poisson's equation.The model includes the spontaneous and piezoelectric polarization effects. The effects of field dependent mobility, velocity saturation and parasitic resistances are included in the current voltage characteristics of the developed two dimensional electron gas (2-DEG) model. The small-signal microwave parameters have been evaluated to determine the output characteristics, device transconductance and cut-off frequency for 50 nm gate length. The peak transconductance of 165mS/mm and a cut-off frequency of 120 GHz have been obtained. The results so obtained are in close agreement with experimental data, thereby proving the validity of the model.