According to a method of reducing power in an optical access network, upon the application of power, an optical network terminal (ONT) operates normally in an activation mode. The ONT then determines whether the requirements for switching from activation mode to power-saving mode are satisfied. If the requirements are satisfied, the ONT transmits a sleep signal to an optical line terminal (OLT), which is a message notifying that the ONT will soon switch to power-saving mode. Thereafter, the ONT switches to power-saving mode and cuts off power for all functions except for power for monitoring and controlling external inputs. The ONT then determines whether the requirements for switching from power-saving mode to activation mode are satisfied. If the requirements are satisfied, the ONT transmits a wake-up signal to the OLT and switches to the activation mode for normal operation.