A system and method for an Avalanche photo-diode (“APD”) optical receiver and laser system to adjust its performance during system operation without disturbing network traffic. Very small changes may be adaptively applied to some key portions of the system by controlling a set of main system parameters including Q-factor; Bit Error Rate (BER); histograms of “1” and “0” levels; input optical power; and laser output power. This adaptive routine may be performed during operation of the system to keep the main system parameters close to their optimum value. During adjustment, the system may be divided into separate portions. The adjustment of each portion may be independent of the other portions of the system. For the optical network system, optimization and priority of different portions may be assigned based on network channel architecture.