A receiving apparatus and method for processing a differential phase shift keying signal carrying a plurality of symbols are disclosed to provide for improved compensation of linear and non-linear noise in phase modulated optical transmission. The receiving apparatus comprises an input unit for receiving electrical signals derived from an optical signal and a calculation unit for calculating a current value of a decision variable. The current value is indicative of a differential phase shift in the optical signal between a currently received symbol and a previously received symbol as a function of the optical signal power of the optical signal for the currently received symbol and at least one previous value of the decision variable. The receiving apparatus also comprises a decision unit for determining the differential phase shift from the current value of the decision variable obtained from the calculation unit to obtain the currently received symbol.