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We demonstrate an optical header processing system using a 1.55-μm polarization bistable vertical-cavity surface-emitting laser (VCSEL) that operates as an all-optical AND gate and a holding element. Depending on the state of 1 bit in the 4-bit header, the VCSEL held one of two-orthogonal polarization states. The light of the VCSEL output through a polarizer switched and held the output state of an optical switch. This enables the payload to be sent to the destination determined by the header. The characteristics of the polarization bistable VCSEL enable low-power consumption and lower latency operation. The system also has the potential to process multibit optical headers involved in ultrafast optical packets.