This paper provides a detailed analysis of gain-clamped doped-fiber amplifiers and design guidelines in a wavelength division multiplexed (WDM) networking environment. A simple dynamic model of the doped-fiber amplifier allows us to derive explicit expressions for the small-signal response, which help identify and optimize the most critical parameters for best dynamic performance. The most important parameter is the pump power, which should be chosen 1–2 dB’s above its required open-loop value, with all channels present, for the required signal gain. In an all-optical networking scenario with input power per channel as high as -3 dBm the required pump power may well exceed 20 dBm. Thus optimization of other parameters such as laser wavelength and loop loss are important. For best dynamic performance either the loop loss should be extremely small, implying a very large laser flux, or the laser gain variation in response to a perturbation should be large. Accordingly, the laser wavelength should be placed either close to the unity-gain region of the clamped gain profile, or at its peak. Finally, the small signal model for a chain of clamped amplifiers is provided, and it is shown that long chains are vulnerable to low-frequency input signal perturbations.