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All forms of dispersion degrade a light wave signal, reducing the data carrying capacity through pulse-broadening. Chromatic dispersion results from a variation in propagation delay with wavelength, and is affected by Fiber materials and dimensions. In this paper we briefly review limitation imposed by chromatic dispersion on optical fiber system. We have presented idea about how to design fiber optics system using dispersion compensated fiber to reduce chromatic dispersion. We are providing mathematical design for optical fiber system to reduce chromatic dispersion with bit rate 2.5 Gbps, for wavelength 1550 nm. The use of dispersion compensating fibers (DCF΄s) has now emerged as the most practical technique to compensate for the chromatic dispersion in the long-haul, optically amplified Standard fiber. [ABSTRACT FROM AUTHOR]