A new type of polarization independent guided-wave optical filter with etalon-like spectral response for wavelength-division multiplexing (WDM) is described and analyzed. A four-port integrated optic device performs the spectral slicing (wavelength interleaving/deinterleaving) function of selecting equally spaced frequency channels from a group of incident WDM channels. Spectral selection is based upon codirectional transverse electric (TE)/spl harr/transverse magnetic (TM) conversion induced by N equally spaced coupling regions in a single mode optical waveguide. A matrix formulation is used to determine the TE/spl harr/TM coupling strengths which yield N-1 equally spaced nulls between adjacent selected frequencies, for N as high as 16. Spectral response is calculated for polarization coupling regions of infinitesimal length as well as for polarization coupling induced by gratings of finite extent. Lithium niobate, due to its high birefringence, is an ideal substrate material for dense WDM filters. Polarization coupling can be induced by a sparse grating of an overlay material such as fused silica. The spectral response can be tuned at submicrosecond speeds by an applied electric field which alters the waveguide birefringence, and hence the optical frequency at which near-complete polarization conversion occurs. A reflective design to make more effective use of the available substrate dimension is described. Single channel selection over a wide spectral range can be achieved by cascading two of the filters in series.