We have present an all-optical technique to significantly reduce the dispersion penalty of a spectrum-sliced channel in high-speed and long-distance transmissions. We have reduced the necessary optical bandwidth for the 2.5 Gb/s incoherent light transmission down to 0.1 nm by expanding the optical bandwidth of a received signal. The optical bandwidth expansion was realized using the intra-channel fiber four-wave mixing at the receiver resulting in an improvement of th signal-to-noise ratio of the received light channel. We have successfully demonstrated the transmission of a 2.5 Gb/s NRZ signal with the 0.1 nm bandwidth over a 300 km dispersion-shifted fiber. An error floor occurs at $1{ imes}10^{-5}$ BER without the optical bandwidth expansion. With the optical bandwidth expansion, however, the error floor decreases to less than $1{ imes}10^{-10}$. The transmission penalty was less than 0.5 dB at $1{ imes}10^{-10}$ BER. To our knowledge, the optical bandwidth of 0.1 nm used in our experiment is the narrowest optical bandwidth reported so far.