This paper demonstrates the performance of erbium-doped fiber amplifier (EDFA) and avalanche photodiode receiver in a dynamic wavelength division multiplexing (WDM) system. A four channel 10 Gb/s system is taken into consideration, and the performance of EDFA is assessed. The experimental setup consists of a transmitter, a receiver, and two intermediate nodes. The transmitted system is tested for bit error rate and eye pattern at the receiver. The spectrum is also analyzed for different lengths of fiber. Add drop experiment was carried out on in which a laser source was switched on and off continuously to assess the transient response of WDM system. Then, the eye pattern is analysed in which EDFA system will provide a clear open eye with no degradation of signal.