We present the nonlinearity compensation scheme using optical phase conjugation (OPC) for dense wavelength division multiplexing (DWDM) transmission systems. The OPC is realized by four-wave mixing process in a dispersion engineered chalcogenide waveguide. Performance of the 4×56 Gbit/s DQPSK system in nonlinear transmission scheme has been investigated. Simulated results also indicate that this method is effective in nonlinearity compensation for the PSK formats. The influence of the pump power, the location of OPC module and the residual dispersion of the fiber link is also investigated via simulation.