The semiconductor optical amplifier has the feature of inhomogeneous broadening, which makes it an ideal gain medium for constructing multiwavelength fiber lasers. A novel multiwavelength fiber laser employing a semiconductor optical amplifier within a fiber ring cavity is proposed on the basis of the theoretical analysis of the Lyot-Saganc filter with two segments of polarization-maintaining fiber (PMF). This fiber laser can generate 18-wavelength laser output with signal-to-noise ratio (SNR) 30 dB and wavelength through the wavelength selection by the Lyot-Saganc filter, ranging from 1556 nm to 1577 nm. The grid spacing of the output laser can be selected between ITU grid spacings, 0.4 nm and 0.8 nm, at room temperature by tuning the polarization controller in the Lyot-Saganc ring. This fiber laser has good tunability and stability with a high signal-to-noise ratio.