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The fast-paced evolution of long-haul and high-bit-rate terrestrial and submarine optical transmission links requires powerful analysis tools that take into account all the relevant phenomena in the fiber. To provide such a tool, we developed a time-domain optical system simulation package, integrated in the TOPSIM simulation environment. The fiber simulation module makes use of the vector form of the propagation equations to account for the quasi-degenerate two-mode (the two polarizations) medium propagation characteristics. This way, all polarization-related effects and their interplay with the other linear and nonlinear phenomena in the fiber can be accurately modeled. In particular, the fiber third-order susceptivity, responsible for all major nonlinear effects, is expressed in its actual vector form, so that nonlinear polarization mode coupling could be accounted for. Conventional birefringence and PMD are …