A wavelength-tracking dispersion compensator (WT-DC) tracks the wavelength of a received input signal. The WT-DC includes an input signal optical monitor, a differential detector control circuit, a temperature controller, and an input signal dispersion compensator. The monitor includes a Mach-Zehnder interferometer that matches the dispersion compensator free-spectral range or an integer sub-multiple or multiple thereof. The monitor is coupled to the differential detector control circuit that controls a temperature controller to set the temperature of the monitor and dispersion compensator. The WT-DC automatically tracks the wavelength of the input signal. In a preferred embodiment, the monitor and the dispersion compensator are integrated on the same planar lightwave circuit chip and include a half-wave plate.