A 3-input all-optical priority encoder is designed. Proof-of-concept experiment is performed at 40-Gbit/s based on a cross-gain modulation (XGM) in two parallel semiconductor optical amplifiers (SOAs). Output logic signals with over 10-dB extinction ratios (ERs) and clear open eye diagrams are obtained. No additional input light beam is used. The proposed scheme may be a promising candidate for future ultrafast all-optical digital signal processing circuits and computing systems.