We experimentally investigate the performance of a distributed Raman amplifier (DRA)-based pulse compressor for a phase modulated signal. A 10 Gb/s return-to-zero (RZ)-differential phase shift keying (DPSK) signal is compressed to picosecond range after transmission. Pulsewidth is continuously compressed in a wide range from 20 to 3.2 ps by changing the pump power of the DRA while the compressed waveforms are well-matched with sech² function. Error-free operations at bit-error-rate (BER) of 10^-9 are achieved for the compressed signals of various pulsewidths with low power penalties within 2.3 dB compared to the back-to-back. After the compression, the 10 Gb/s signal is used to generate a 40 Gb/s RZ-DPSK optical time division multiplexing (OTDM) signal. This 40 Gb/s OTDM signal is then successfully demultiplexed to 10 Gb/s DPSK signal by using an optical gate based on four-wave mixing (FWM) in a highly nonlinear fiber (HNLF).