Abstract. A bidirectional optical subassembly comprised of a 2.5 Gbps distributed feedback (DFB) laser diode (LD) directly modulated laser transmitter and a 10 Gbps positive intrinsic negative photodiode receiver was developed for an optical network unit of a 10 Gbps passive optical network. Here, a low-cost mini-dual-in-line package was modified to contain whole components of a transmitter and receiver in a single space while satisfying the requirements of 10 Gbps microdevice package standards. The transmitter was fabricated to achieve high optical output power by placing a micro aspheric lens very close to the DFB LD and reducing the thermal resistance between an LD chip and heat sink to bring down the DFB LD chip temperature. As a result, the transmitter output power was 3.5 dB higher than a conventional transistor outline can BOSA due to a high optical coupling efficiency of more than 70% and a low thermal resistance for heat dissipation. The receiver sensitivity was −21 dBm at a bit error rate of 10 −3 and the sensitivity penalty of the receiver due to signal crosstalk was less than 0.3 dB.