The recently developed digital coherent receiver enables us to employ a variety of spectrally efficient modulation formats such as <inline-formula><tex-math>M</tex-math></inline-formula>-ary phase-shift keying and quadrature-amplitude modulation. Moreover, in the digital domain, we can equalize all linear transmission impairments such as group-velocity dispersion and polarization-mode dispersion of transmission fibers, because coherent detection preserves the phase information of the optical signal. This paper reviews the history of research and development related to coherent optical communications and describes the principle of coherent detection, including its quantum-noise characteristics. In addition, it discusses the role of digital signal processing in mitigating linear transmission impairments, estimating the carrier phase, and tracking the state of polarization of the signal in coherent receivers.