A direct modulation PSK system and method, in a coherent optical fiber transmission system, in which an injection current supplied to a laser diode is adapted to be directly varied is disclosed. In this system or method, a modulating current pulse is superposed on a bias current for the laser diode so that a specified phase condition may be satisfied. Thereby, a differential coding circuit and an external modulator being indispensable for a DPSK system become unnecessary and, in addition, the system becomes less susceptible to the influence of wavelength dispersion than the DPSK system and able to reproduce the carrier.