AlGaN/GaN HFETs are well known strong candidates for high power devices due to superior material properties of the nitrides. Practical amplifiers, however, do not demonstrate the good RF linearity performance predicted from fundamental semiconductor materials properties. In particular, it has been demonstrated that a nonlinear source resistance is generated in these devices due to the onset of space-charge limited (SCL) transport in the gate-source region. In this work a physics based large signal FET model was modified to include the nonlinear source resistance effect and RF channel breakdown. The impact of nonlinear source resistance and RF channel breakdown on AlGaN/GaN HFETs RF and linearity performance were studied. The physical mechanisms were able to be quantified and determined using the analytical physics based model. It allows the development and optimization of a power amplifier before the device is fabricated. The physical device model used in this work permits determination of the nonlinear distortion under large signal operation as a function of bias, device physical parameters such as structural dimensions, doping, etc, and circuit tuning conditions.