A dense WDM transmission system is promising for high-capacity fiber optic links. In a dense WDM system with a moderate number of channels, the total wavelength range can be within the discrete/continuous tuning range of multisection DBR lasers. Therefore, a laser array consisting of laser diodes with the same nominal wavelength can be used. In this paper, we propose a new frequency stabilization and channel identification technique for dense WDM transmission systems. The laser diodes on the transmitter side are frequency modulated by sinusoidal signals that are used as pilot tones for channel identification on the receiver side. Depending on the difference between the optical filter's central frequency and the received optical signal frequency, the filter output can be the sinusoidal signal itself or its second harmonic. We use a nonlinear electronic circuit and a phase-locked loop to regenerate the sinusoidal signal. This provides a reliable source for channel identification. Meanwhile, there is no need to modulate the optical filter central-frequency to lock it to the received signal since the received signal is already frequency-dithered and the sinusoidal signal is recovered on the receiver side. This eliminates the power penalty due to frequency-dither of the optical filter.