This paper proposes a new 16-ary quadrature amplitude modulation (QAM) direct regenerator to be used in digital communications systems. Theoretical analysis follows to evaluate the performance of a two-link system in additive Gaussian noise (AGN) incorporating a practical 16-ary QAM direct regenerator and an ideal coherent receiver. In addition to nonlinearities and circuit limitations in the regenerator, optimum detection in the receiver is also taken into account.