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A novel technique for rephasing, reshaping, and reamplifying (Rp + 2R) of nonreturn-to-zero differential phase- shift keying (NRZ-DPSK) data is demonstrated. The regenerator operation and performance are evaluated using numerical simulations. The system can regenerate 40-Gb/s NRZ-DPSK data degraded with both random amplitude and phase noise (linear or nonlinear). Regenerated NRZ-DPSK has the same original data pattern and wavelength. The DPSK quality-factor and optical signal-to-noise ratio (OSNR) improves significantly, and the output differential phase error is very small. The bit-error ratio (BER) shows improvement of the received data OSNR ranging from 9.5 dB at 10-4 BER up to 10.5 dB at 10-9 BER.