— Recently there has been some interest in optical CDMA (OCDMA) for optical networks. A major drawback of OCDMA systems is their low spectral efficiency. This paper explores a novel modulation scheme for OCDMA systems which increases the spectral efficiency called code-cycle modulation (CCM) which uses different cyclic shifts of the spreading sequence assigned to each user to transmit an M-ary information. While the idea of using M-ary OCDMA modulation has been proposed using other means, most of these modulation schemes need M different receiver units to recover the data which causes complexity and power issues in the receiver. The advantage of our scheme is that we propose a supporting receiver architecture which doesn’t suffer from complexity and power issues as mentioned above. In the rest of the paper we analyze the performance of this modulation scheme. I.