—In this paper, we consider the problem of routing and wavelength assignment (RWA) in all-optical networks, where signals propagate in the optical domain (with no electrical regeneration) from end-to-end. In such networks, physical impairments are an issue and can cause calls to be blocked if a minimum Quality of Transmission (QoT) measured in terms of bit-error rate (BER) cannot be guaranteed for all calls, at all times. We focus on the routing component of RWA to incorporate QoT: we propose a novel RWA algorithm that finds a route based on both the network utilization and the physical impairments experienced over the tentative route. Our algorithm is fully decentralized and is shown using simulations to perform better than previously proposed algorithms on a regional-sized network.