Amplification and simultaneous phase regeneration of DPSK signals is demonstrated using a phase- sensitive amplifier. Phase- sensitive gain is achieved in a Sagnac fiber interferometer comprised of non-polarization maintaining, highly nonlinear fiber operating in the un- depleted pump regime. Both the pump and signal are RZ- DPSK pulse trains. The amplifier is capable of producing greater than 13 dB of phase- sensitive gain for an average pumping power of 100 mW, and easily reduces the BER of the regenerated DPSK signal by two orders of magnitude compared to the un- regenerated signal, corresponding to a negative power penalty of 2 dB. Careful optimization of the regenerator reveals much stronger BER improvement. (C) 2005 Optical Society of America.