Optical time domain reflectometry (OTDR) is a commonly used technique for characterization and fault location of optical fiber transmission systems. It involves measuring the fraction of a probe pulse that is scattered back (by Rayleigh scattering) from a silica fiber. Because of the very small levels of backscatter in single-mode fiber at long wavelengths, very sensitive optical detection is necessary to achieve adequate range performance. This paper gives the principles of operation and performance of a coherent OTDR system designed for use at 1.3 μm and its realization as a robust field-portable instrument with a specified performance of better than 24-dB one-way range, and 0.2-dB fault loss resolution. Coherent detection gives ultimate receiver sensitivity and also reduces the dynamic range requirements of the electronic signal processing. To realize these advantages, a novel technique is used to provide the necessary highly coherent source from a semiconductor laser. Sophisticated Signal processing techniques are employed both pre- and post-detection to integrate the signal out of the noise and also to reduce coherent fading effects. The various components of the system and their development into a robust instrument are described, and the performance of the system over long lengths of fiber both in the laboratory and more importantly on installed transmission links is presented in detail, showing achieved performance considerably better than this specified minimum.