A bidirectional multiplexer and demultiplexer based on a single waveguide grating is presented. In one embodiment of the invention, the device contains a multi/demultiplexer having an echelle grating disposed between a plurality of input channels and a plurality of output channel arrays. The input and output channels are assigned in a particular order, such that the multiplex and demultiplex functions have the same wavelength channels and such that the blaze angle of the grating facets are optimized simultaneously for both the multiplex and demultiplex function. Because the optical signals are multiplexed and demultiplexed by the same dispersive element, problems of mismatching performance introduced by using different optical components are obviated. The input/output waveguides of the dual-function device can be coupled to a single fiber array, thus reducing the packaging cost.