We demonstrate an all-optical label and payload separator based on nonlinear polarization rotation in a semiconductor optical amplifier. The proposed scheme uses a variable packet length composed of a label and payload information signal modulated intensity modulation and differential phase-shift keying (DPSK) format, respectively. The separation is obtained by using the payload signal itself, exploiting the DPSK feature of being power constant, as a pumping light source. Therefore, the proposed scheme is asynchronous and does not need an external control signal. © 2005 IEEE.