In mixed-line-rate (MLR) networks, different line rates can coexist on the same fiber on different wavelengths. MLR brings flexibility to handle diverse demands. High line rates require advanced modulation techniques, such as DQPSK and DP-QPSK. On the other hand, signals being propagated over transparent paths are exposed to detrimental effects of physical layer impairments (PLI). Advanced modulation techniques are more susceptible to PLI, especially to the cross phase modulation (XPM) induced by intensity modulated channels. Inverse multiplexing, in MLR networks, is a technique which tries to exploit the advantage of transmitting the signals with low line rates where the high line rate is not possible due to impairments. In this study, we investigate the performance of employing inverse multiplexing technique in MLR networks, for dynamic RWA problem considering physical-layer impairments. © 2012 IEEE.