A 40 Gb/s optical time division multiplexing (OTDM) system is presented and discussed. Frame structure of OTDM data stream is designed based on unequal amplitude coding methods. Gain-switched distributed-feedback laser (GS-DFB) and comb-like dispersion profiled fiber (CDPF) are employed to generate the ultra-short optical pulses; chirped fiber grating for dispersion compensation; electro-absorption modulator (EAM) for de-multiplexing the 40 Gbit/s data stream. The frame clock (10 GHz) is extracted from the data stream with high Q value electronic filter. After transmission over 122 km single mode fiber (SMF), bit error rate of the whole system is less than 10 -9.