The 2.5 Gb/s bias-free modulator with integral attenuator combines a modulator and a 20 dB variable attenuator within one small-outline package, simplifying component count and fiber splicing. The bias point of the interferometer is set to operate at about the half-intensity point (quadrature). A bias control circuit is not required. The attenuator is based on proven integrated optical waveguide technology, making it highly reliable. The modulator provides superior signal quality over a wide range of wavelengths in the C and L bands, and can be used to modulate tunable lasers. These devices are used for 2.5 Gb/s modulation and dynamic power leveling in dense wavelength division multiplexing (DWDM) systems.