Abstract Network coding techniques are seen as the new dimension to improve the network performances thanks to the capability of utilizing network resources more efficiently. Indeed, the application of network coding to the realm of failure recovery in optical networks has been marking a major departure from traditional protection schemes as it could potentially achieve both rapid recovery and capacity improvement, challenging the prevailing wisdom of trading capacity efficiency for speed recovery and vice versa. In this context, the maturing of all-optical XOR technologies appears as a good match to the necessity of a more efficient protection in transparent optical networks. In addressing this opportunity, we propose to use a practical all-optical XOR network coding to leverage the conventional 1 + 1 optical path protection in transparent WDM optical networks. The network coding-assisted protection solution combines protection flows of two demands sharing the same destination node in supportive conditions, paving the way for reducing the backup capacity. A novel mathematical model taking into account the operation of new protection scheme for optimal network designs is formulated as the integer linear programming. Numerical results based on extensive simulations on realistic topologies, COST239 and NSFNET networks, are presented to highlight the benefits of our proposal compared to the conventional approach in terms of wavelength resources efficiency and network throughput.