Abstract: The tunable optical filter is provided, comprising an optical means for separating an input optical signal into a tunable drop optical signal and an output optical signal, wherein the output optical signal is directed back along the same path as the input optical signal. One embodiment of the invention comprises an optical circulator, a pair of polarization beam splitters, a pair of half-wave plates, an optical thin-film filter, a rotatable mirror, a spatially fixed mirror. Optical wavelengths are selected by making angular adjustments to the optical thin-film filter and the rotatable mirror, which are rotated by the same angle. A corresponding method for spectrally splitting and spatially separating an input optical signal into an output optical signal and a drop optical signal is also provided.