A technique for simultaneous amplification and compression of ultrashort fundamental solitons is proposed. It is based on an erbium-doped nonlinear amplifying fiber loop mirror. Numerical simulations show that, unlike conventional erbium-doped fiber amplifiers in which nonlinear effects lead to serious distortion of amplified pulses, the proposed device performs not only distortion-free amplification but also efficient compression of ultrashort solitons. Using a 92.6 m erbium-doped fiber loop with a gain of 14.4 dB, the peak intensity of a 2 ps fundamental soliton is amplified by a factor of 165 with a compression factor of 10.48 and a time-bandwidth product of 0.303. The pedestal energy accounts for only 3.8% of the total energy of the amplified pulse which means that the pulse is very close to a fundamental soliton.