This paper proposes a 3-stage ATM switch architecture that uses optical WDM (wavelength division multiplexing) grouped links and dynamic bandwidth sharing. The proposed architecture has two features. The first is the use of WDM technology which makes the number of cables used in the system proportional to system size. The second is the use of dynamic bandwidth sharing among WDM grouped links. This prevents the statistical multiplexing gain offered by WDM from falling even if the switching system becomes large. A performance evaluation confirms the scaleability and cost-effectiveness of the proposed architecture.