By using wavelength-parallel polarimetry and hyperfine optical pulse shaping for sensing and compensation of the frequency-dependent Jones matrix, optical compensation of all-order polarisation mode dispersion is experimentally demonstrated with .40 ps mean differential group delay in a 10 Gbit/s × 2 Pol-Mux system (10% RZ).Introduction: Polarisation division multiplexing (Pol-Mux) is an important method to improve spectral efficiency in lightwave communications. For Pol-Mux used in ultra-high-capacity fibre systems, polarisation mode dispersion (PMD) [1] not only distorts and broadens the signal, but also couples polarisation-multiplexed channels. In the case of large PMD, this coupling becomes strongly frequency-dependent. Moreover, PMD lowers Pol-Mux transmission tolerance to fibre nonlinearity and chromatic dispersion. Therefore, for fibre spans in which the PMD is not very small, PMD compensation (PMDC) is required [2]. Most research on PMDC, either electrical [3] or optical [4], has been limited to the first-or second-order PMD regimes, which are valid only for distortions that are small compared to the bit period or pulse width. Our group has used a hyperfine resolution optical pulse shaper for compensation of all-order PMD, for which the PMD varies strongly within the bandwidth of the optical signal [5]. In this previous work the compensator was tested with low repetition rate, isolated pulses, which were distorted and spread over .100 ps as a result of all-order PMD, then successfully restored via PMDC to their original 15 ps duration. In other experiments using a similar scheme, but designed for larger optical bandwidth and ultra-short pulses, 800 fs pulses were fully compensated for after being distorted to .10 ps by all-order PMD [6]. Here we perform 10 Gbit/s × 2 PolMux RZ (pulse width is 9.4 ps FWHM) system experiments in which this scheme is demonstrated for compensation of all-order PMD with .40 ps mean differential group delay (DGD).