All-optical buffer can store the packets in optical-domain and is a key component in all-optical router, all-optical calculation and all-optical switching. A novel all-optical buffer based on nonlinear polarization rotation in semiconductor optical amplifier (SOA) and a method which utilizes the principal states of polarization (PSP) to find two orthogonal linear states of polarization (SOPs) were proposed. This method can measure the SOP on-line. By adjusting the injection current of SOA the conversion between two orthogonal linear SOPs was realized. The operation of the proposed optical buffer at 2.5 Gb/s was experimentally setup. The writing in and reading out operations of 1024 bits random data for 6 circulations by this optical buffer were demonstrated.