A correlation optical time domain reflectometer (OTDR) system embeds an OTDR signal in a digital data signal that is to be converted into an optical signal and transmitted across an optical fiber to a remote receiver. In particular, the digital data signal is amplitude modulated with the OTDR signal, which is based on a pseudo noise (PN) sequence, such as an M-sequence. The amplitude modulation is relatively small, for example, less than about 10% of the digital data signal's peak amplitude in an effort to limit the OTDR signal's effect on communication performance. A sequence recovery element receives reflections from the optical fiber and converts the reflections to digital samples. Each digital sample from the sequence recovery element is correlated by correlators that respectively correspond to delays and, hence, locations along the optical fiber, and accumulators accumulate the correlation values from the correlators. Based on the accumulated values, the correlation OTDR system unobtrusively identifies anomaly locations along the optical fiber while payload data is being communicated across the fiber.