The invention provides an optical system, in particular, a multi-channel parallel optical transceiver system and methods of forming the same. The multi-channel parallel optical system includes a first substrate with at least one optical component mounted on its first side, a second substrate with optical fibers affixed in fiber fixing structures (grooves), the second substrate being mounted on the first side of the first substrate perpendicular to the first side of the first substrate so that the optical signal can be transmitted and received between the optical fibers and the mounted optical components with minimum loss. Passive alignment assembly is realized by using a series of alignment pins and holes and/or grooves pre-fabricated on the substrates. The optical systems may additionally include other structures to provide additional functionalities, in-line monitor photodetectors, and mechanical support or substrate elevation.