All-optical regeneration based on self-phase modulation in a highly nonlinear microstructured fiber is proposed. The dispersion and nonlinearity properties of a series of microstructured fibers are analyzed and the results show that the nonlinearity coefficient is closely related to the structure of the fiber. The nonlinear coefficient is increased by reducing the effective mode area and a highly nonlinear microstructured fiber with large air-filling ratio is used as the nonlinear medium in optical regeneration. The process of all-optical regeneration based on self-phase modulation in the fiber is investigated. The numerical results show a good optical regeneration result can be obtained by using a relatively short fiber length due to the high nonlinearity of the fiber. The input peak power launched into the microstructured fiber and the parameters of the filter have much influence on optical regeneration. In order to achieve good optical regeneration results, those parameters need to meet certain requirements. Furthermore, the transmission characteristic of the regenerator is also discussed. With adjustable input peak power and filter parameters, the regenerator can deal with the input pulses with different pulse widths.