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In this paper, we review recent advances in ultrafast optical time-domain technology with emphasis on the use in optical packet switching. In this respect, several key building blocks, including high-rate laser sources applicable to any time-division-multiplexing (TDM) application, optical logic circuits for bitwise processing, and clock-recovery circuits for timing synchronization with both synchronous and asynchronous data traffic, are described in detail. The circuits take advantage of the ultrafast nonlinear transfer function of semiconductor-based devices to operate successfully at rates beyond 10 Gb/s. We also demonstrate two more complex circuits-a header extraction unit and an exchange-bypass switch-operating at 10 Gb/s. These two units are key blocks for any general-purpose packet routing/switching application. Finally, we discuss the system perspective of all these modules and propose their possible incorporation in a packet switch architecture to provide low-level but high-speed functionalities. The goal is to perform as many operations as possible in the optical domain to increase node throughput and to alleviate the network from unwanted and expensive optical-electrical-optical conversions.