A method for generating D-N-PSK optical signals is disclosed wherein a laser is modulated to generate optical signal pairs including phase modulated and fixed phase portions, the phase modulated portions having a frequency encoding one or more data symbols and the fixed phase portion having a carrier frequency and a phase corresponding to the immediately preceding phase modulated portion. The output of the laser is passed through an optical spectrum reshaper having a transmission function chosen to attenuate a plurality of the phase modulated portions relative to the fixed phase portions. The phase modulated portions may have N frequency levels located on either side of the carrier frequency. One of the N frequency levels may be equal to the carrier frequency.