The purpose of this paper is to demonstrate the potential of an electrical signal processing technique to mitigate the effect of intersymbol interference in metro optical networks, using optical coherent detection. Intersymbol interference in fiber-optic systems can severely degrade the system performance and subsequently limit both the maximum transmission distance and data rate. The main sources of intersymbol interference include chromatic dispersion (CD) and polarization mode dispersion (PMD). The typical reach for 10 Gb/s metro optical systems is on the order of 300 km. To bridge this distance either with or without repeaters, we demonstrate the potential use of 10 Gb/s differential phase-shift keying (DPSK) modulation format in conjunction with an optical coherent receiver with a built-in switchable electrical dispersion compensator. The overall performance of the optical coherent receiver is compared with that of the corresponding direct detection (DD) receiver based on Mach-Zehnder delay interferometer. The optical signal-to-noise (OSNR) required to operate the optical coherent receiver at the enhanced forward error correction (EFEC) threshold of 2.1 X 10-3 is 6 dB/0.1 nm resolution bandwidth. The optical coherent receiver outperforms in absolute required OSNR by 0.5 dB at the EFEC threshold when compared to a DD receiver. A four position switchable CD compensator compensates up to ?5100 ps/nm of CD, using the method of heterodyne detection. The optical coherent receiver has a first-order PMD tolerance of 36.2 ps for 1 dB OSNR penalty. The utility of our optical coherent receiver is demonstrated by doing transmission experiments over 304 km of standard single-mode fiber (SSMF) in both repeatered (multiple spans) and repeaterless (single span) to measure the self-phase modulation (SPM) tolerance of 10 Gb/s nonreturn-to-zero (NRZ)-DPSK. The measured SPM tolerance of NRZ-DPSK over 304 km of SSMF in three spans of ~100 km each is +8.8 dBm fiber launch- - power for 1.5 dB OSNR penalty. In addition, the best Q factor of ~12 dB is obtained for the fiber launch power of +18 dBm over single repeaterless span of 304 km of SSMF, which gives ~3 dB of system margin at the second generation EFEC threshold of 9.1 dB.