We present a comprehensive model for In(0.18)Ga(0.82)N/GaN self-assembled quantum dot (QD) active material. The strain distribution in the QD structure is studied using linear elastic theory with the application of the shrink-fit boundary condition at the material interface. Subsequent calculations also predict the strain-induced quantum-confined Stark effect (QCSE). Under carrier injection, the overall effect of band bending and charge screening is studied by solving the Schrödinger and Poisson equations self-consistently. The optical gain spectrum of the InGaN/GaN QD active material is calculated based on the electronic states solved from the Schrödinger-Poisson equation, and both the calculated material gain peak and emission wavelength agree well with the measured experimental data.