We report on the fabrication and characterization of InP-buried InAlGaAs rectangular core waveguides, LP-MOCVD is used for growth of the InAlGaAs-InP material system and the regrowth of InP. Reactive ion-etching is employed for achieving smooth and precise etch profiles. An efficient procedure for preparing the surface is described that results in homogeneous epitaxial InP overgrowth by preventing re-oxidation of the air-exposed etched surface. The loss characteristics of waveguides with a core layer thickness of 450 nm and widths ranging from 3.5 to 6 /spl mu/m are investigated at 1.3-/spl mu/m wavelength. The propagation loss is found to increase from 3 to 10 dB/cm with decreasing core width. Scattering loss caused by residual sidewall roughness is found to be the dominant loss mechanism.