A dispersion compensating method for carrying out automatic level control with the use of target output power and an ASE correction value corresponding to the number of wavelengths to multiplex and making output power of a wavelength multiplexed signal constant, comprising the steps of: switching into automatic gain control in which the output power of the wavelength multiplexed signal is made constant, to carry out increase/decrease of the wavelengths to multiplex; varying a dispersion compensating amount based on the increase/decrease of the wavelengths by the automatic gain control; calculating an ASE variation amount due to the change in the dispersion compensating amount; and reflecting the ASE variation amount on the ASE correction value and switching into the automatic level control.