In nondispersive media, the minimum distance that can be resolved by partial coherence interferometry (PCI) and optical coherence tomography (OCT) is inversely proportional to the source spectral bandwidth. Dispersion tends to increase the signal width and to degrade the resolution. We analyze the situation for PCI ranging and OCT imaging of ocular structures. It can be shown that for each ocular segment an optimum source bandwidth yielding optimum resolution exists. If the resolution is to be improved beyond this point, the group dispersion of the ocular media has to be compensated. With the use of a dispersion compensating element, and employing a broadband superluminescent diode, we demonstrate a resolution of 5 μm in the retina of both a model eye and a human eye in vivo. This is an improvement by a factor of 2–3 as compared to currently used instruments. © 1999 Society of Photo-Optical Instrumentation Engineers.