We successfully simulated the 10 × 40 Gbit/s soliton RZ-DPSK WDM signals over 1050 km with spectral efficiency approaching 0.4 bit/s/Hz using semiconductor optical amplifiers (SOAs) as in-line amplifier. The cross-gain saturation of SOA can be minimized by settling crosstalk at a lower level by decreasing the differential gain. This decrease in differential gain is in such a way that we get nil power penalty. The maximum transmission distance of 1050 km is possible with differential gain 210 atto cm 2 of SOA.The impact of amplification factor, ASE noise power, crosstalk, quality factor and bit error rate for different differential gain has been investigated. It has been shown that with the increase in differential gain of SOA, the transmission distance goes on decreasing. At high value of differential gain 2.5 × 10 −16 cm 2 for the transmission distance 1050 km, all channels produce inter channel crosstalk with bit error rate greater than 10 −6 . But for lower differential gain 190 atto cm 2 , the quality of all channel increases at the cost of large power penalty.With slight increase in differential gain 200 atto cm 2 , the maximum transmission distance observed is 4550 km with quality of received signal more than 15 dB and having nil power penalty. We observed clear eye diagrams and optical power spectra for received signal with transmission distance 1050 km and 4550 km using soliton RZ-DPSK system. The bit error rate for all channels increase more than 10 −10 with the increase in launched input power that is due to power saturation.