AbstractA new method is proposed to compensate for chromatic dispersion and self‐phase modulation in a transmission fiber with a loss using optical phase conjugate (OPC). The ratio of the optical Kerr effect and the dispersion was designed to be equal at each position before and after the OPC. The pulse shape is precompensated before OPC by transmission through a fiber with large dispersion whereas the transmission line consists of an optical amplifier repeated fiber link with a small dispersion. A computer simulation demonstrates effective compensation for waveform distortion in a 40‐Gb/s no‐return‐to‐zero (NRZ) intensity‐modulated light transmission. The method will be effectively applied to both wavelength demultiplexing method (WDM) systems and long‐haul transmission systems.