A system and method for wavelength division multiplexing and demultiplexing with broadened and flattened passband profiles are disclosed. A spectral modifying element may be used to broaden and flatten the passband profile of associated multiple wavelength optical signals and spectral components. The system preferably includes a light focusing device and a diffraction grating having a direction of dispersion. The spectral modify element primarily transforms or broadens and flattens optical signals in only the direction of dispersion of the associated diffraction grating.