We demonstrate an all-optical label and payload separator based on nonlinear polarization rotation in a semiconductor optical amplifier (SOA). The proposed scheme uses a packet format composed of a label and payload information signal combined with a control signal by using polarization division multiplexing. The control signal is employed to separate the label from the payload signal by exploiting nonlinear polarization rotation in a SOA. Experimental results show a label from payload suppression factor of 22 dB. This scheme operates asynchronously and does not need external control signal. Clean and wide open eye diagrams are obtained for both the payload and the label signal operating at bit-rates of 10 Gbit/s and 625 Mbit/s, respectively. © 2004 Optical Society of America.