The work in this thesis addressed various digital pulse time modulation (DPTM) schemes suitable for free space optical (FSO) communications. Three modulation schemes are considered: on-off keying (OOK), pulse position modulation (PPM), and differential pulse position (DPPM). Performance of FSO communication system under these modulation schemes are discussed. Simulation results are presented to compare the bit-error-rate (BER), the average and peak power, and the bandwidth requirement among these schemes. The dynamic of semiconductor laser is simulated under various DPTM scheme. The simulation is based on solving numerically the laser rate equations for photon and carrier densities. The rate equations take into account various system parameters such as gain compression factor and carrier recombination mechanisms. Simulation results are presented using MatLab7 to assess the capability of semiconductor laser to operate at high bit rate DPTM scheme. The results indicate clearly that PPM and DPPM dynamic response is more effected by gain compression factor compared with OOK.