Using ultrashort laser pulses, we have observed quadrature squeezing a
nd parametric gain in quasi-phase-matched KTiOPO4 waveguides. Using a
local oscillator pulse that is 2.5 times shorter than the squeezed pul
se, we observed noise reduction of 12 +/- 1% below the shot-noise leve
l. Parametric amplification and deamplification of a coherent seed pul
se have also been observed, with no indication of gain-induced diffrac
tion.