Configuration of a novel compact dispersive and focusing device based on a Curved Waveguide Grating (CWG) is presented, which is essentially an integrated optic wavelength demultiplexer consisting of a curved stripe waveguide with tilted grating, a slab waveguide adjacent to it, and a set of output waveguides locate on focal line of the curved waveguide. Underlying wavelength demultiplexing mechanism of CWG is theoretically illustrated by employing the Fourier optics approach. Analysis shows that device based on CWG possesses fine wavelength resolution, compact configuration, and potentially low cost as well, which make it a promising wavelength demultiplexer, or a network performance monitor, in DWDM optical networks.