The modulation response of quantum-dot (QD) lasers is studied. Based on a set of four rate equations, a new analytical modulation transfer function is developed via a small-signal analysis. The transfer function can clearly describe the impacts of the wetting layer and the excited states: finite carrier capture and carrier relaxation times as well as the Pauli blocking limits the modulation bandwidth. The definitions of the resonance frequency and the damping factor of QD lasers are also improved. From the analysis, it is demonstrated that carrier escape from the ground state to the excited states leads to a nonzero resonance frequency at low bias powers associated to a strong damping factor.