This thesis studies dispersion management and modulation formats for optical communication systems using per channel bit rates at and above 10 Gbit/s. Novel modulation formats—including recently proposed multilevel phase modulation—are investigated and demonstrated at bit rates up to 80 Gbit/s. New dispersion compensating fibre (DCF) types—referred to as inverse dispersion fibres (IDFs)—allow for novel span designs by using the DCF as cabled transmission fibre. These novel fibre span designs are compared to conventional spans for 10 and 40 Gbit/s systems with 80 km span length based on single mode fibre (SMF). We find that using SMF+IDF results in improved transmission performance, compared to SMF+DCF, primarily due to lower span loss. A systematic investigation of non return-to-zero (NRZ) and return-tozero (RZ) line coding in 10 Gbit/s systems with 80 km fibre spans shows that for a single-channel system, the optimum pulse width is very narrow. We find that a pulse width equal to 5% of the bit slot results in optimum performance for the system studied here. These narrow RZ pulses offer good receiver sensitivity and excellent tolerance to the nonlinear effect self phase modulation (SPM). However, due to the broad spectrum associated with narrow pulses, the optimum pulse width in wavelength division multiplexing (WDM) systems will be a tradeoff between receiver sensitivity and nonlinear tolerance on one hand, and spectral efficiency requirements on the other. Several advanced modulation formats have recently been suggested in order to mitigate effects of dispersion-induced broadening or non-linear signal degradation, including carrier suppressed return-to zero (CS-RZ), single side band return-to-zero (SSB-RZ), duobinary, etc. A thorough investigation of 40 Gbit/s systems with 80 km span length is carried out to compare the relative performance of six different on off keying (OOK) modulation formats. We find that (plain-)RZ with narrow pulse width is optimum for single-channel systems. For a 100 GHz spaced WDM system, CS-RZ or SSB-RZ results in optimum performance as these formats offer both narrow spectral width and good transmission properties. The cost of an optical communication system can be lowered by using longer span lengths to reduce the number of amplifier stations. We experimentally study optimum dispersion compensation schemes for systems with 160 km fibre spans made of non-zero dispersion shifted fibre (NZDSF) and DCF. Pre-, post- and symmetrical dispersion compensation schemes are compared in a 40 Gbit/s RZ system using both lumped erbium doped fibre amplifiers (EDFAs) and distributed Raman amplification. We show that the symmetrical scheme results in optimum system performance. Differential phase shift keying (DPSK) has recently been showed to be a promising modulation format for optical communication. We study DPSK with focus on differential quadrature phase shift keying (DQPSK). In a 12.5 Gbit/s WDM system, we demonstrate the suitability of DQPSK for ultra-long haul optical communication systems by obtaining good performance even after transmission over 6500 km. Studying different channel spacings, we demonstrate transmission over transoceanic distances of this DQPSK system with up to 0.66 bit/s/Hz spectral efficiency. Four-level modulation formats allow for generation of signal with bit rate twice that of binary systems. We demonstrate this in an experiment where 80 Gbit/s DQPSK is generated using 40 Gbit/s components. Using four-wave mixing (FWM) in a highly nonlinear fibre, we demonstrate for the first time wavelength conversion of such high-speed phase modulated signals. In summary, we show that dispersion management using recently developed fibres in combination with advanced modulation formats significantly improves the transmission performance compared to traditional systems. Multi-level phase modulation is demonstrated at bit rates up to 80 Gbit/s, and we experimentally demonstrate that multi level phase modulated signals are suitable for transoceanic spectrally efficient WDM systems.