New methods are developed for evaluating the average error probability in the presence of crosstalk for direct detection wavelength division multiplexed systems. A specific objective is the identification of soundly based performance evaluation tools adequately accommodating signal dependent noise, or compound randomness, encountered with systems incorporating optical amplifiers or avalanche photodiode receivers. To this end, explicit moment generating functions (MGFs) for the random processes, including crosstalk, are developed and incorporated into formulations based on a modified Chernoff bound (MCB) and saddlepoint approximation (SAP). The latter is used primarily to examine the tightness of the former, more readily applicable technique. Specific results are presented to illustrate the application of these new techniques. These indicate that signal to interference ratio (SIR) of some 15.2 dB is required for a PIN receiver if per formance is to be maintained unimpaired by crosstalk with a bit error rate (BER) of 10−9. In contrast, for an APD receiver a slightly greater SIR is required, an SIR of 16.4 dB being found to be necessary for an APD gain of 10, for example.