We report the effects of external optical feedback on the power penalty of commercial distributed feedback laser diode (DFB-LD) modules for 2.5 Gb s(-1) optical transmission systems. External optical feedback presented to the DFB-LD modules causes the excitation of external cavity modes, resulting in increased relative intensity noise (RIN) and intensity noise ripples at low frequency region below 500 MHz. For a 10(-10) bit error rate (BER), the minimum power penalty is as much as 1.25 dB for a feedback ratio of -8.8 dB. An excess power penalty of 0.5 dB per 3 dB increase in the feedback ratio was also empirically obtained. We suggest that optical isolators in 2.5 Gb s DFB-LD modules used in conventional optical transmission systems or WDM systems must have a peak isolation ratio of better than 54.5 dB, instead of the previously recommended 30 dB, for negligible power penalty induced by external optical feedback.