Information systems experience revolutionary changes due to rapid advances in the field of high performance computing and communications. Presently, there clearly exist two extremes in interconnection technologies: electrical interconnects dominate short distance communications of information within digital computing systems, whereas optical fiber interconnects are dominant in long distance telecommunication applications. However, recently, optical interconnection technology is increasingly being used for interconnections to peripheral devices, computers as well as backplanes. Simultaneously, the feature size of silicon VLSI technology decreases resulting in increased bandwidth that will become available for computation, increasing the demand for communication bandwidth, and thus relying on development of novel interconnect technologies [l-31. In this paper we will discuss three examples on using novel diffractive optics with multifunctionality [4-161 and nonlinear optical technologies [ 17,181 for realization of optical interconnections for communication and computing applications.For our first example, we will introduce polarization selective diffractive optical elements [4, 5, 7, 111 and describe their application for packaging the optical interconnections to an optoelectronic VLSI device with a two dimensional U 0 arrays [14]. This example uses threedimensional optical interconnection technologies via free-space propagation in the direction normal to the planar surface consisting of optical transmitter and receivers. Our example uses an optoelectronic VLSI consisting of a two-dimensional array of multiple quantum well self-electrooptic-effect light modulators and photodetectors integrated with a prefabricated silicon integrated circuits using flip-chip bonding technique. The optoelectronic VLSI is connected electrically and optically aligned with the polarization selective diffractive element into a standard PGA package, and tested experimentally demonstrating good performance [ 141.Our second example employs the polarization selective diffractive optical elements to construct an array of polarization-sensitive optoelectronic switching elements [ S , 151 integrated into a transparent switching fabric [16], allowing the routing of data between its input and output ports at bandwidths independent of the switching speed of individual switching elements. Once the switches are set, the data is transmitted with time-of-flight delay, without requiring opticalto-electrical conversions within the interconnection network, supporting transmission rates greater than lTbit/sec per channel. As a specific example, a folded transparent multistage optical interconnection network architecture will be introduced. It consists of a two-dimensional array of polarization selective diffractive optical elements combined with a two-dimensional array of polarization modulators to construct the switching fabric. Each row in the array defines the nodes in a single stage, whereas the multistage communication is achieved by using free spac...