This paper proposes a novel service differentiation mechanism utilizing optical buffers in transparent optical networks. We first introduce fiber delay line (FDL)-based optical buffers and propose a hybrid shared optical buffered node. Based on the proposed buffer, diverse service requirements can be satisfied by assigning different priorities on accessing the buffer. Since the blocking performance is affected by the basic delay unit of FDL represented by a ratio of the burst length, this paper also takes into account the effect of the burst assembly process on the buffer performance. By dynamically adjusting the burst length under the changing traffic load, optimal performance of the proposed optical buffer can be achieved. Our simulation results show that diverse service requirements can be satisfied in terms of burst blocking probability and buffering delay time. (c) 2006 Optical Society of America.