It is presented the experiment of all-optical demultiplexing of one 2.5 Gb/s channel from an 8×2.5 Gb/s OTDM data stream using nonlinear optical loop morror with 3 km dispersion shifted fiber. Bit error rate (BER) of the demultiplexed channel is measured. A BER of 10-11 is achieved and the power penalty is only 1.4 dB when BER is 10-9.