Spectrum-slicing is an attractive WDM technique for realizing colorless ONUs in wavelength division multiplexed passive optical network (WDM-PON). It uses wavelength multiplexer (λmUX) as optical filters to obtain a spectral slice of light from a broadband light source (BLS) and modulates encode data onto the slice. A theoretical analysis elucidates that the effects of chromatic dispersion will reduce because the spectrum outside the bandwidth of λMUX will be filtered out after spectrum slicing. At the 20 nm CWDM channel spacing, 155 Mb/s per channel at distance of 20 km on a G.625 fiber is supported with optical power penalty less than 1 dB; while at 0.8 nm DWDM channel spacing, 2.5 Gb/s per channel is supported with optical power penalty less than 0.5 dB. Direct modulation colorless ONU at 125 Mb/s is proposed and demonstrated by using LED with centre wavelength at 1550 nm, output power of -10 dB and a bandwidth of 70 nm. A four-channel WDM-PON over 20 km fiber with channel spacing of 20 nm is tested. The result shows optical power penalty caused by chromatic dispersion is less than 1 dB and optical power margin is more than 5.6 dB.