AbstractIn optical frequency division multiplexing (FDM) transmission systems using optical amplifiers, the transmission distance is limited mainly by gain‐tilt of erbiumdoped fiber amplifiers (EDFAs), accumulations of the ASE noise, and crosstalk due to the four‐wave mixing (FWM). Especially when dispersion‐shifted fibers are used, the transmission distance is limited by the decrease of the allowable input level to the fiber due to the FWM. It is shown here that a 0.98‐μm pumped EDFA has a smaller gain‐tilt accumulation and is suitable for optical FDM transmission. Level diagram is designed taking into account the ASE noise and the FWM crosstalk accumulation; the relationship between fiber‐EDFA input level and the receiver sensitivity is investigated. A 128‐channel optical FDM transmission experiment with 10‐GHz spacing was carried out, and it is demonstrated that all channels can be successfully transmitted through 480 km of dispersion‐shifted fiber with a power penalty of less than 1 dB by using a tunable gain equalizer.