We present results that demonstrate the active management of eight /spl sim/100-GHz-spaced wavelength-division-multiplexed (WDM) channels using a polarization-insensitive spatial-light-modulator-based holographic filter. The filter has a fundamental stepping resolution close to 25 GHz and 3-dB width of each individual passband equal to 42 GHz. Arbitrary permutations of dropped and passed channels are possible. Additionally, passed channels can be transmitted according to an equal-amplitude comb filter function or be transmitted with weighted-amplitude passbands to effect power equalization where necessary. The holographic technique is further extendable to passband spectral engineering, yielding near-rectangular top hat passbands. Suppression of the dropped channels, which is consistently >15 dB in these experiments, can be straightforwardly improved by deploying a spatial light modulator of greater resolution and higher pixel number. The technology has potential application as the key element in both an optical add-drop multiplexer and a dynamic multichannel equalizer. The passband 3-dB width can be straightforwardly reduced to allow processing of multiple channels at the 50-GHz spacing of future WDM systems.