This thesis deals with the theory and applications of the nonlinear optical loop mirror (NOLM). Novel methods to restore and filter optical data as well as generate high peak power optical pulses using the NOLM are demonstrated. Further more, new approaches for polarization indep endent demultiplexing and a fully polarization independent all-optical AND-gate are proposed and experimentally demonstrated. The NOLM has been widely employed as an ultrafast demultiplexing device with the potential of demultiplexing data at speeds beyond 1 Tbit/s. The nonlinear characteristics of the NOLM can also be utilized for other all-optical applications such as filtering and logic operations. The nonlinear transmission characteristic is used to substantially improve the extinction ratio of an optical data sequence and remove low intensity noise over a wide spectral range. The proposed filtering technique is also successfully employed in a chain of optical amplifiers to generate pulses with very high peak power. Several new schemes for performing polarization independent all optical switching using standard dispersion shifted fibers are also proposed and demonstrated. One scheme utilizes a birefringent element in a control power balanced propagation diversity NOLM. This control power balanced NOLM is shown not to suffer from control power induced crosstalk as the conventional NOLM does. Another scheme employs a dispersion shifted fiber with random birefringence and has the advantage of being polarization independent of both data and control signal, thus constituting a polarization independent AND-gate. Finally a scheme utilizing the optical Kerr effect in a polarization diversity loop is demonstrated. This scheme is not an interferometer which results in better stability than other NOLMs. In addition, a solution to make the NOLM insensitive to acoustical disturbances by rewinding the loop fiber is demonstrated
