The quality factor (Q), mode volume (V eff), and room-temperature lasing threshold of microdisk cavities with embedded quantum dots (QDs) are investigated. Finite element method simulations of standing wave modes within the microdisk reveal that V eff can be as small as 2(λ/n)^3 while maintaining radiation-limited Qs in excess of 10^5. Microdisks with a 2 μm diameter are fabricated in an AlGaAs material containing a single layer of InAs QDs with peak emission at λ = 1317 nm. For devices with V eff ~2 (λ/n)^3, Qs as high as 1.2× 10^5 are measured passively in the 1.4 μm band, using an optical fiber taper waveguide. Optical pumping yields laser emission in the 1.3 μm band, with room temperature, continuous-wave thresholds as low as 1 μW of absorbed pump power. Out-coupling of the laser emission is also shown to be significantly enhanced through the use of optical fiber tapers, with a laser differential efficiency as high as ξ ~ 16% and out-coupling efficiency in excess of 28% measured after accounting for losses in the optical fiber system.