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Ultrafast all-optical switching based on the optical Kerr effect in a Sagnac interferometer which consists of a dichroic polarization-maintaining fiber coupler and dispersion-shifted polarization-maintaining fiber loop is reported. This nonlinear Sagnac interferometer switch has the advantage of high stability originating from completely balanced interfering arms. In addition, because dispersion-shifted fibers were used, increases in switching power and switching time were prevented. Moreover, polarization fluctuation was completely suppressed due to the all-polarization maintaining fiber configuration. The required switching power for complete switching was measured to be 1.8 W for a 200-m-long fiber. All-optical time division demultiplexing and logic operations, including inversion and operation, using the nonlinear Sagnac interferometer switch were successfully demonstrated at 5 Gb/s.< >