A coherent demodulation scheme based on injection locking local laser and optical phase compensation is proposed. The local oscillator (LO) is recovered by injection locking, and the signal is demodulated via homodyne coherent detection. Using the proportional-integral-derivative (PID) algorithm to control the piezoelectric ceramic (PZT) enables the optical phase compensation. The results demonstrate that the fluctuation of optical phase difference does not exceed ±4.8°. The modulation, transmission, and demodulation experiments of a dual-user 400-Mbit/s pseudo-random binary sequence (PRBS) in the ultra-dense wavelength division multiplexing passive optical network (UDWDM-PON) are implemented. Additionally, the bit error rate (BER) test is conducted.