The modulation characteristics of the negative nonlinear absorption effect were investigated in an erbium nitrate solution using a 1510 nm laser diode. The reversed-phase waveform was obtained in the transmitted laser for a sample length of 3.0 mm. With decrease in the modulation degree, the reversed-phase waveforms were observed at modulation degrees smaller than 72%. With increase in the modulation frequency, the transmitted waveforms were asymmetrical. The optical signal inversion phenomenon for 1.5μm can be explained by considering an excited state absorption in which energy transfer occurs in a system with high concentrations of the Er3+ ion.