In this paper we have modelled and simulated a 1.6 Tb/s (100�16 Gb/s) optical system based on spectral amplitude coding for the optical code-division multiple- access (SAC-OCDMA) scheme. In order to reduce the effect of multiple-access interference, we have employed a new family of SAC-OCDMA codes called as a multi-diagonal (MD) code. The new code family based on the MD code reveals properties of zero cross-correlation code, flexibility in selecting the code parameters and support of a large number of users, combined with high data rate. Both the numerical and simulation results have demonstrated that our optical system based on the MD code can accommodate maximum numbers of simultaneous users with higher data rate transmission and lower bit error rates, when compared to the former SAC-OCDMA codes.