Under suitable conditions, a Lambda-type three-level system driven by
a strong pump field on one of the transitions and interacting with a w
eak probe field exhibits gain in a probe amplitude without population
inversion [A. Imamoglu, J.E. Field and S.E. Harris, Phys. Rev. Lett 66
(1991) 1154]. We present a theory of gain without population inversio
n in an optically dense medium where the local-field corrections that
arise due to near dipole-dipole interactions, become significant. Nume
rical calculations that account for strong pump induced nonlinearities
in the dense medium, show evidence of a large enhancement of the prob
e gain without population inversion in an optically dense medium.