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Experimental verifications of the feasibility of using chirped fiber grating (CFG) as the dispersion compensation device in a bi-directional hybrid dense-wavelength-division-multiplexing (DWDM) system to reduce the dispersion and cross-phase modulation (XPM) induced crosstalk were proposed and demonstrated. Not only channel capacity was increased, but also good performances of carrier-to-noise ratio (CNR) ≥ 50 dB, composite second order (CSO) ≥ 72 dB, composite triple beat (CTB) ≥ 69 dB and low bit error rate (BER)