In Optical communication network pulse broadening due to chromatic dispersion becoming an important factor for signal degradation. This may become worse when the data transmission rate keep increasing. So in order to achieve high data transmission rate at long span-length light wave system, the chromatic dispersion in the fiber must be compensated. Many compensation techniques have been demonstrated and they exhibit a variety of different and often complimentary properties. Transmitter compensation techniques are the most easily implemented but provide a limited amount of compensation. The most commercially advanced technique is negative dispersion fiber. We discuss the design of a Wavelength Division Multiplexed system (WDM) with dispersion compensation fiber (DCF). The effect of both pre-compensation and post-compensation techniques has also been discussed. The bit error rate (BER) of the system under two different modulation schemes is also discussed and identifies the better modulation format and best compensation technique in WDM network.