— As an optical signal propagates along a lightpath to its destination in distributed wavelength-routed optical networks, the signal’s quality is degraded by transmission impairments, such as node crosstalk, which is induced by power leaking in the network nodes. Consequently, the bit error rate of the received signal at the destination can be unacceptably high. In this paper, a new adaptive wavelength assignment scheme based on wavelength spectrum separation technique is proposed to combat physical impairments in distributed optical networks. The proposed algorithm outperforms traditional techniques as measured by the blocking probability, adding little complexity.