Using the degree of polarization as feedback signal to detect the polarization m ode dispersion (PMD) variation in the fiber links, an experiment of dynamic adap tive PMD compensation in 4×10?Gb/s optical time-division multiplexed (OTDM) tr ansmission system is reported. The PMD compensator consists of a polarization co ntroller and a variable delay line with four degrees of freedom. Based on the va riable step-size peek search algorithm, the performance of the PMD compensator i s assessed in the eye pattern of a received signal. It is shown that the maximum compensated differential group delay is 25?ps, i.e. one bit period, and the co mpensation time can be less than 50?ms.