Optical nonlinearities give rise to many ubiquitous effects in optical fibres. These effects are interesting in them and can be detrimental in optical communication. In the Dense Wave length division multiplexing system (DWDM) the nonlinear effects plays important role .DWDM system offers component reliability, system availability and system margin. DWDM system carries different channels. Hence power level carried by fiber increases which generates nonlinear effect such as SPM ,XPM, SRS, SBS and FWM. Four waves mixing (FWM) is one of the most troubling issues. The FWM gives crosstalk in DWDM system whose channel spacing is narrow. Wavelength exchanging enables data swapping between two different wavelengths simultaneously. These phenomena have been used in many applications in Wavelength Division Multiplexing (WDM) optical networks such as, wavelength conversion, wavelength sampling, optical 3R, optical interconnects and optical add-drop multiplexing.