A new, simple lasing loop configuration employing a fiber grating was proposed and demonstrated for all-optical gain control of erbium-doped fiber amplifier. The lasing loop was designed such that the fiber grating acts as a notch filter to cutoff the lasing light as well as selects the lasing wavelength. The operating gain was clamped to the same level as the loop loss and it could be varied with a tunable directional coupler in the loop. It is believed that this type of gain-controlled erbiumdoped fiber amplifier can have several advantages when used in wavelength-division-multiplexed transmission systems.