A novel scheme for remote supervision of in-line EDFA and fault-location in EDFA cascaded system based on subcarrier modulation is theoretically proposed and experimentally demonstrated. In the scheme, FSK-FDM technique is used in subcarrier modulation, and the EDFA’s supervisory information is transmitted by optical intensity modulation. In this 10 Gbit/s WDM transmission experiments, the system power penalty was 0.16 dB and 0.86 dB, while the subcarrier modulation degree was 3% and 15% respectively. With the technique of phase-lock, demodulation of supervisory information was realized while the modulation degree was 3%. The conclusion comes that this scheme can be applied in a long-haul WDM transmission system with five EDFAs cascaded.