Forward nondegenerate four-wave mixing in an optical-fiber ring resonator is proposed as a method to generate squeezed states of light. The nonlinear interactions are analyzed both with a self-consistent propagation-equation technique and with Fokker-Planck equations in the Glauber-Sudarshan P representation. Excellent squeezing is predicted at modest input power levels, with perfect quantum-noise squeezing at the critical points for optical bistability. A method to suppress the stimulated Brillouin effect is proposed and demonstrated experimentally, and the effects of forward spontaneous guided acoustic wave Brillouin scattering inside the resonator are analyzed. Methods are suggested for minimizing this noise under conditions where squeezing can be detected. Experimental apparatus and procedures are outlined for verifying the predictions of our theory and demonstrating squeezing of classical and quantum noise. © 1986 The American Physical Society.