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To circumvent the challenging issue of Rayleigh noise reduction in wavelength-division-multiplexed passive optical network (WDM-PON), we provide an insight into the source of Rayleigh noise, and confirm that the suppression of carrier Rayleigh backscattering (RB) should be the primary target in the design of Rayleigh noise-resilient upstream receiver module for a transmission reach up to 60 km. Then we propose and demonstrate a novel scheme to effectively suppress the carrier RB in carrier-distributed WDM-PONs. By simply replacing the upstream modulation format of conventional on-off keying (OOK) with differential phase-shift keying (DPSK), the system tolerance to carrier RB is substantially enhanced by 19 dB, as the carrier RB can be considerably rejected by the notch filter-like destructive port of the delay-interferometer (DI) at the optical line terminal (OLT), which is used simultaneously to demodulate the upstream DPSK signal. The dependence of carrier RB suppression on DI's extinction ratio (ER) and optical carrier's line width is also theoretically analyzed. Experimental demonstration of 10-Gb/s upstream signal is achieved with less than 2.5-dB power penalty induced by Rayleigh noise after the transmission in 60-km single mode fiber, without using any amplifier in outside plant. The relation between system margin and the gain of optical network unit (ONU) is also studied.