A method for all-optical reduction of inter-channel crosstalk for spectrally overlapped optical signals for maximizing utilization of an available spectrum includes receiving a plurality of spectrally overlapped optical signals modulated with data. The method further includes generating conjugate copies of each of the plurality of optical signals using non-linear optics. The method further includes selecting the conjugate copies and adjusting an amplitude, a phase, and a delay of the conjugate copies. The method further includes performing inter-channel interference (ICI) compensation on the spectrally overlapped optical signals in an optical domain by adding the adjusted conjugate copies to the spectrally overlapped optical signals.