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Gradual multi-pulse pulse-position modulation (Gradual MPPM) is proposed as a new modulation technique to improve both the performance and bandwidth utilization efficiency of conventional optical multi-pulse pulse-position modulation (MPPM) scheme. While in conventional MPPM scheme, a fixed number of optical pulses is transmitted in every signal block, variable numbers of pulses are transmitted in the proposed scheme. Information is represented by different combinations of the positions of these pulses. The transmission characteristics, bandwidth utilization, and power requirements for the proposed scheme are studied in this paper. Several performance measures are derived and compared to that of conventional MPPM scheme. Our results reveal that the proposed modulation scheme achieves higher transmission energy efficiency (in bits per photon) at the same symbol error rate (SER). In addition, at the same average power, the proposed gradual MPPM scheme achieves much lower levels of SERs than that of the ordinary MPPM scheme. Furthermore, the proposed scheme allows much more symbols to be transmitted per frame than that of the ordinary MPPM scheme with the same frame size. This clearly leads to significant enhancement in the achieved bandwidth utilization efficiency.