This paper describes the design of Mach Zehnder Interferometer and reviews its applications in emerging optical communication networks. Mach Zehnder Interferometer is basically used to measure relative phase shift between two collimated beams from a coherent light source. Using this basic principle a number of devices can be designed, few of these such as optical sensors, all-optical switches, optical add-drop multiplexer and modulator are discussed in this paper.