Steep dispersion of opposite signs in driven degenerate two-level atomic transitions have been predicted and observed on the D2 line of 87 Rb in an optically thin vapor cell. The intensity dependence of the anomalous dispersion has been studied. The maximum observed value of anomalous dispersion (dn/dν ≃ −6× 10 −11 Hz −1 ) corresponds to a negative group velocity Vg ≃ −c/23000. 42.50. Gy, 32.80.Qk, 42.62.Fi, Investigations of coherent effects in resonant media, namely coherent population trapping (CPT) and electromagnetically induced transparency (EIT) [1,2], which can dramatically modify the absorptive and dispersive properties of an atomic vapor, have caused a rebirth of interest in the problem of light propagation through a dispersive medium. In the last decade, the study of the dispersive properties of coherently prepared media was always under attention due to fundamental and practical interest.An ultra-large index of refraction in coherently prepared resonant gas was predicted [3] and a refractive index variation as large as ∆n ≈ 1 × 10 −4 was demonstrated in a dense Rb vapor [4]. It was also shown that a coherently driven medium exhibits large dispersion [5]. A high normal dispersion (up to dn/dν ≃ 1 × 10 −11 Hz −1 ) was measured on the Cs D 2 line in a vapor cell [6] and in an atomic beam [7]. Recently, extremely slow light group velocity (17 m/s) associated with normal dispersion was demonstrated in an ultracold atomic sample [8]. However, the same order of magnitude of group velocity (90 m/s) was observed in a hot dense vapor cell [9].All these investigations were carried on alkaline atoms where the absorption is strongly suppressed and dispersion is steep and normal (D ≡ dn/dν > 0) due to CPT between the two ground state hyperfine levels (Λ scheme). However, atomic coherence among Zeeman sublevels belonging to the same ground-state hyperfine level can led not only to usual EIT, but also to an absorption enhancement named as electromagnetically induced absorption (EIA) [10,11]. Since EIT/EIA effects in degenerate two-level systems can produce a significant variation in the absorption with subnatural width, one can predict a large absolute value of dispersion in this case. Notice that at resonance dispersion would be normal (D > 0) for EIT and anomalous (D < 0) for EIA. In both cases the absolute value of the dispersion can be several orders of magnitude greater than for a linear medium. In this letter we present the first observation of steep anomalous and normal dispersion in coherently prepared degenerate two-level atomic system.Refractive index and dispersion were analyzed with the model recently used to study subnatural EIA resonances [12]. In this model, two monochromatic optical fields, a drive field and a weak probe field with amplitudes E d , E p and frequencies ω d , ω p respectively are incident on motionless two-level atoms with resonance frequency ω 0 and electric dipole moment µ. The atomic levels are degenerate. The configuration is closed. The spontaneous decay rate is Γ. Finite interact...