Modified duobinary return-to-zero (MD-RZ) format is an improvement of optical duobinary (ODB) format. This paper proposes a novel, all-optical method to generate MD-RZ format by using a polarization maintaining fiber loop mirror (PMFLM). Operation principle for all-optical format conversion is theoretically analyzed and the output spectrum is simulated. 40-Gb/s MD-RZ data format generation is experimentally demonstrated.