We demonstrate wavelength conversion of 2.5Gb/s optical signals by four-wave mixing (FWM) in a semiconductor optical amplifier (SOA). We investigate the effect of input pump and signal powers on the coversion efficiency, optical signal-to-noise ratio (OSNR) and extinction ratio to be a measure of performance in a wavelength converter. As a result, we show that the maximum bit error rate (BER) performance can be obtained by co promising among high-vonversion efficiency (minimum Pprobe), high-OSNR (maximum Pprobe) and low-cross-gain saturation effects (Pprobe kept at least 6dB weaker than Ppump). In our experiment, we obtain optimum performance at +3 dBm pump power and -6dBm signal power. The power penalty incurred in the wavelength conversion can be minimized by careful selection of the input pump and signal powers. We show that about 0.5dB power penalty for 3.2nm wavelength coversion at 10-10 BER is achievable.