Parametric amplification and wavelength conversion based on four-wave mixing in materials with third-order nonlinearity may find a variety of applications in future high-capacity fiber-optic transmission systems including low-noise amplification with variable gain spectrum and arbitrary center wavelength, nonlinearity compensation during transmission through phase conjugation and contention resolution in network nodes through wavelength conversion. One of the expected key advantages for such devices is the possibility for modulation format and bit rate independent operation enabling transparent networking. The focus of the book is put on the processing of directly and coherently detected phase-shift keying (PSK) formats as well as 16-quadrature amplitude modulation (16-QAM). Devices based on the highly nonlinear fiber (HNLF) and the semiconductor optical amplifier (SOA) are theoretically examined using analytical and numerical calculations. The underlying models are presented in detail within the book. A large part of the book is dedicated to the analysis of different types of phase distortions and its impact on the considered modulation formats in terms of the bit-error rate.