A new nonlinear optical loop mirror (NOLM) constructed from a dispersion decreasing fiber (DDF) and a normal fiber is proposed. Numerical simulation shows that a ultra-short pulse with pedestal suppression and little chirp can be generated in the new optical loop mirror and the ultra-short pulse can steadily propagate over a long lossless fiber. The compression factor and pedestal energy of the compressed pulse are related to the width and peak power of the initial pulse. The compression factor and the pedestal energy are decreasing but the optimum fiber length is increasing with the growing initial optical pulse width. In the other case, the compression factor and the pedestal energy are increasing but the required optical fiber length is decreasing with the growing input peak power. When the pulse is in optimum compression, the bigger compression factor is obtained and the optical fiber used becomes shorter comparing to the nonlinear optical loop mirror constructed from dispersion-decreasing fiber.