A single-longitudinal mode fiber laser with fiber saturable absorber is designed. Tunable fiber Bragg grating as the wavelength selector is in the ring cavity with a 2 m-long unpumped erbium-doped fiber. A section of high concentration erbium-doped fiber is pumped by a 980 nm laser diode and the standing-wave interference is produced in the saturable absorber. Single-longitudinal mode laser at 1.55 μm band is observed and the output range is 42 nm. The optical bistable is observed because the absorption for laser reduces with the increasing of the pump power. Only one laser simultaneously pumps fiber amplifier and laser through a splitter for enhancing stability and decreasing noise. The output power exceeds 24 mW and the stability is less than ±0.005 dB. The laser slope efficiency is 18.5%. A 12.5 Gb/s codes rate is used in the fiber laser transmission experiment. The signal is transmitted in 42 km without regeneration. This fiber laser has potential applications in the field of the high capacity communications.