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We present an automatic compensator that effectively mitigates signal distortion due to polarization-mode dispersion (PMD). Accurate compensation is achieved by utilizing a degree of polarization (DOP) monitor with a measurement uncertainty of better than 1% achieved by applying a self-dependent precalibration procedure. The compensation performance at 43 Gb/s was evaluated systematically with respect to both first- and second-order PMD by using a crystal-optical PMD emulator. The compensator extended the tolerable differential group-delay (DGD) limit from 8 to 28 ps, while maintaining the Q penalty below 1 dB. In terms of the average of a Maxwellian-distributed DGD, the PMD compensator enabled transmission for up to 8 ps, or about three times higher than the level tolerated in the uncompensated case. In addition to the compensation performance, we demonstrate successful operation, even for distorted signals with high chromatic dispersion. We believe this capability will be a key enabler for a combined operation with adaptive chromatic dispersion compensators.