The OPO consists essentially of an optical resonator and a nonlinear optical crystal. The optical resonator serves to resonate at least one of signal and idler waves. In the nonlinear optical crystal, the pump, signal and idler waves overlap. The interaction between these three waves leads to amplitude gain for signal and idler waves (parametric amplification) and a corresponding deamplification of the pump wave. The gain allows the resonating wave(s) (signal or idler or both) to oscillate in the resonator, compensating the loss that the resonating wave(s) experience(s) at each round-trip. This loss includes the loss due to outcoupling by one of the resonator mirrors, which provides the desired output wave. Since the (relative) loss is independent of the pump power, but the gain is dependent on pump power, at low pump power there is insufficient gain to support oscillation. Only when the pump power reaches a particular threshold level, oscillation occurs. Above threshold, the gain depends also on the amplitude of the resonated wave. Thus, in steady-state operation, the amplitude of the resonated wave is determined by the condition that this gain equals the (constant) loss. The circulating amplitude increases with increasing pump power, and so does the output power.

The photon conversion efficiency, the number of output photons per unit time in the output signal or idler wave relative to number of pump photons incident per unit time into the OPO can be high, in the range of tens of percent. Typical threshold pump power is between tens of milliwatts to several watts, depending on losses of the resonator, the frequencies of the interacting light, the intensity in the nonlinear material, and its nonlinearity. Output powers of several watts can be achieved. There exist both continuous-wave and pulsed OPOs. The latter are easier to build, since the high intensity lasts only for a tiny fraction of a second, which damages the nonlinear optical material and the mirrors less than a continuous high intensity.
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