The output state of a nonlinear Mach-Zehnder interferometer is shown to be an effective number-phase minimum-uncertainty state with reduced photon-number uncertainty. This interferometer includes an optical Kerr medium in one arm with a coherent-state input. Unusual ``crescent''-shaped squeezing which preserves photon number is revealed in the unitary evolution associated with a self-phase-modulation in the Kerr medium. Photon-number uncertainty 〈\ensuremath{\Delta}n${^}^{2}$〉 can be reduced by interference with a coherent-state reference wave. It can be minimized to 〈n^
〉1/3, far below the limit 〈n^
〉2/3 achieved by an ordinary squeezed state. The increased phase uncertainty due to self-phase-modulation and the reduced photon-number uncertainty still preserve the minimum-uncertainty product 〈\ensuremath{\Delta}n${^}^{2}$〉〈\ensuremath{\Delta}\ensuremath{\Phi}${^}^{2}$〉\ensuremath{\sim}(1/4). .AE
The origin of quantum noise is addressed and it can be eliminated when the quantum state is optimally prepared for the single measured observable. Minimum uncertainty states are reviewed using Q (α) -representation, which include squeezed states and number-phase minimum uncertainty states. Squeezing is a concept of trading quantum uncertainties between two conjugate observables to optimize the state for the measurement. Need for optical nonlinearity to achieve squeezing is induced. Principles and experimental results for squeezing quadrature amplitude and photon number are delineated. Applications to optical communications and optical precision measurement are briefly stated.