Systems and methods for performing closed-loop diagnostics in optical transceiver. The TOSA of an optical receiver includes a primary transmit module and a secondary receiver module. The transmit module transmits a data signal to a ROSA of another optical transceiver. The ROSA has a secondary transmit module that can transmit a diagnostic data signal back to the secondary receiver module of the TOSA. The TOSA can use the diagnostic data received from the ROSA to automatically adjust itself and perform closed-loop feedback functions. The closed loop diagnostics can be implemented in a network where one transceiver may be connected with more than one other transceiver in a multi-node configuration.