This project is enabling the Physics Department at Austin College to place significant emphasis on laser physics and other modern optics topics in a new course, Modern Optics. This course was created in a recent evaluation and revision of the physics curriculum at the College. Major equipment being purchased include an optical spectrum analyzer to study the longitudinal mode structure of lasers, laser systems (constructed locally) with helium-neon discharge tubes and, external optical cavities to study cavity stability and transverse mode structures, and an acousto-optic cell with driver to be used for communications (over a laser beam or through an optical fiber) experiments and speed of light measurements. A sophisticated computer system with powerful software for data acquisition and analysis is being purchased which will allow building on students' experience with other simpler computer systems. This system allows students who are not expert programmers to build "virtual instruments" which perform specialized tasks such as recording diffraction patterns using a linear CCD sensor. A group of lasers, optical breadboards, and additional optical components, e.g., a variable beamsplitter, are being acquired to carry out these and other experiments. These studies are being conducted in a specific course, but simplified versions of some experiments are being used in lower level courses, and the equipment is also available for upper level physics students doing independent work.NSF grant funds are being matched with funds from non-federal sources.