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This work presents a loop terminated asymmetric Mach–Zehnder interferometer (LT-aMZI) structure based on the widespread silicon-on-insulator (SOI) platform. Four different path length differences of the LT-aMZI, which correspond to free spectral ranges (FSR) from 0.8 to 6.4 nm, are designed. These designs are compared to the common asymmetric Mach–Zehnder interferometer (C-aMZI) and are shown to be more compact. These devices are suitable for optical filtering as well as wavelength demultiplexing (WDM) applications. A compact analytical model is derived that accurately describe the operation of the LT-MZI devices. The designs are then fabricated using Electron Beam Lithography (EBL) and characterized. The experimental data show good agreement when compared to the simulation results. To our knowledge, this is the first time LT-aMZI fabrication and characterization. Moreover, the LT-MZI spectrum can be tuned not only by the interferometer arms phase difference like C-MZI, but also by using its directional couplers coefficients, forming a spectral tunable filter. Finally, we determine the performance parameters of optical sensors and modulators and show that our proposed LT-MZI structure will enhance the sensor figure of merit (FOM) and modulator speed, power consumption and Vπ × L compared to C-MZI. A comparison between symmetric and asymmetric MZI sensors and the advantage of the latter is also mentioned. [ABSTRACT FROM AUTHOR]