The method of path integration is applied to the analysis of wave propagation in both a graded-index optical waveguide and in an otherwise homogeneous infinite medium whose refractive indices have random statistical inhomogeneities superposed upon a regular variation of refractive index with suitable averaged properties. We use techniques originally employed in the context of electron propagation in a set of random scatterers to calculate the averaged Green function describing paraxial wave propagation in a medium whose refractive index has statistical inhomogeneities. The concept of an averaged density of modes is introduced, and the paper presents detailed calculations of this quantity for two limiting cases. In the first, the correlation length associated with the distribution of inhomogeneities is zero along the direction of propagation. In the second, the Feynman variational technique is used to describe the propagator in a medium whose statistical inhomogeneities have an infinite correlation length along the direction of propagation. Comments are made about the intermediate case which is of greater relevance to real waveguides.