The development of optical-fiber amplifiers allowed a dramatic increase in the capacity of optical transmission systems while reducing system costs. Capacity increases are possible because the high output powers afforded by optical-fiber amplifiers support higher bit rates, while their broad bandwidth and slow gain dynamics allow multichannel operation. This benefit comes at the expense of having to manage signal-to-noise ratio degradations due to the accumulation of amplifier noise and dispersion distortions accumulated over the total system link. Furthermore, nonlinear optical effects become significant with the use of high power signals over long lengths of fiber, causing cross talk among the different channels and increasing signal distortions. To fully exploit the potential capacity of wavelength division multiplexing systems, the optical characteristics of the fibers and optical-fiber amplifiers must be optimized. The optical amplifiers should have low noise and flat gain, which can be achieved by using 980-nm pump lasers, optimized fiber glass composition, and gain-flattening filters. The optical fibers should have a small nonzero dispersion and large effective area. Both features can be achieved by optimizing the fiber index profile. This paper summarizes the state of the art in these components and points to directions for future exploration.