The authors demonstrate the use of time-division multiplexing (TDM) to realize a high capacity optical star network. The fundamental element of the demonstration network is a 10 ps, wavelength tunable, low jitter, pulse source. Electrical data is encoded onto three optical pulse trains, and the resultant low duty cycle optical data channels are multiplexed together using 25 ps fiber delay lines. This gives an overall network capacity of 40 Gb/s. A nonlinear optical loop mirror (NOLM) is used to carry out the demultiplexing at the station receiver. The channel to be switched out can be selected by adjusting the phase of the electrical signal used to generate the control pulses for the NOLM. By using external injection into a gain-switched distributed feedback (DFB) laser we are able to obtain very low jitter control pulses of 4-ps duration (RMS jitter <1 ps) after compression of the highly chirped gain switched pulses in a normal dispersive fiber. This enables us to achieve excellent eye openings for the three demultiplexed channels. The difficulty in obtaining complete switching of the signal pulses is presented. This is shown to be due to the deformation of the control pulse in the NOLM (caused by the soliton effect compression). The use of optical time-division multiplexing (OTDM) with all-optical switching devices is shown to be an excellent method to allow us to exploit as efficiently as possible the available fiber bandwidth, and to achieve very high bit-rate optical networks.