An optical communication system and method are provided which utilize dispersion-induced FM to AM conversion with nonlinearity-induced AM stabilization. The system and method utilize a frequency modulated optical signal transmitter, a fiber span, an optical receiver which receives the transmitted optical signal and detects an AM signal resulting from dispersion-induced energy overlaps and voids in the optical signal, and one or more in-line amplifiers spaced within the optical fiber span. By adjusting the number, position and/or output power levels of the in-line amplifiers, stabilization of the energy voids and overlaps and resulting AM signal can be achieved, yielding a substantial increase in achievable transmission distance at a given bit rate.