A phase-locked optical heterodyne receiver constructed using a 1320-nm diode-pumped miniature Nd:YAG ring laser is discussed. Using this receiver and a transmitter based on another Nd:YAG laser, a 560-Mb/s phase-shift keying (PSK) synchronous heterodyne transmission was demonstrated over 78 km of single-mode fiber. With an optical phase-locked loop (PLL) natural frequency of 32 kHz and a damping factor of 1.46, the receiver sensitivity, measured at the output of the transmission link, was -48.7 dBm, or 159 photons/b. The corresponding detected sensitivity, measured on the surface of the p-i-n diode, was -51.8 dBm or 78 photons/b. This result suggests that the receiver sensitivity would have been about 82 photons/b if a balanced receiver with 0.2-dB excess coupler loss had been used. The impact of the finite intermediate frequency (IF) on heterodyne system performance was investigated; it was found that an IF of at least twice the bit rate is needed for a negligibly small penalty.< <ETX xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">></ETX>
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