All-optical demultiplexing of 10-Gb/s base-rate channels out of 160 Gb/s optical time-division-multiplexed (OTDM) data streams is demonstrated. The demultiplexer in 160 Gb/s OTDM system utilizes a highly nonlinear optical loop mirror(NOLM). The relation of bit-error-rate (BER) of a demultiplexing versus walk-off and clock power at different timing jitter of date signals is calculated. The extinction ratio of demultiplexing window versus clock power at different walk-off is investigated. There is a proper clock power range, which can achieve the maximal extinetion ratio of demultiplexing and lower crosstalk of adjacent channels. Based on the developed ultra-short optical pulse source, the 160 Gb/s OTDM experimental system is demonstrated. For different signal powers, the extinction ratio changes little with signal power. When the data signal power is 7.3 dBm, the extinction ratio of window is over 23 dB. The time-division demultiplexing from 160 Gb/s to 10 Gb/s is achieved with error-free with nonlinear optical loop mirror structure including highly nonlinear fiber.