A novel optical add-drop multiplexer (OADM) based on the Mach-Zehnder (M-Z) interferometer and the fiber Bragg grating (FBG) is proposed. The OADM consists of a M-Z interferometer, two optical circulators and three FBGs. The FBG between two circulators acts as an optical switch. The OADM can add/drop one of the input multi-channels or pass the channels directly by adjusting the relative wavelength of the FBG. The channel isolation of the OADM is more than 23 dB, and the same frequency crosstalk is below -40 dB. The system can not only just download a specific wavelength, but also adjust the wavelengths of upper and lower carriers. The novel OADM has many advantages such as simple structure, low cost, good flexibility. It can be used in practical wavelength division multiplexing (WDM) system.