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Digital infinite impulse response (IIR) filtering is proposed as a means for compensating chromatic dispersion in homodyne-detected optical transmission systems with subsequent digital signal processing. Compared to finite impulse response (FIR) filtering, IIR filtering achieves dispersion compensation (DC) using a significantly smaller number of taps. DC of 80 and 160 km in a 10-Gb/s binary phase-shift-keying is experimentally compared for the two filtering schemes. IIR filtering can achieve performance similar to the FIR filtering scheme.