Provisioning dynamic traffic is a major challenge in wavelength-routed networks. While the routes of connections are mainly determined by using global state information, different connections that share the same link may still compete for the same resources. These conflicts can cause significant blocking, a problem that becomes more serious as traffic becomes more dynamic and as the state information changes more frequently. Therefore, it is increasingly important to design appropriate signaling schemes to avoid blocking due to contention between different simultaneous connection requests. In this paper, we propose a new distributed signaling scheme, Intermediate-Node Initiated Reservation (IIR), for establishing dynamic lightpaths in wavelength-routed networks. In the framework of IIR, reservations may be initiated at any set of nodes along the path of a connection, and multiple wavelengths may be reserved. Two IIR implementations are designed for networks with no wavelength conversion and with sparse wavelength conversion. Extensive simulation results show that the IIR scheme outperforms the original schemes under various network and traffic conditions. Simulation results also show that the IIR scheme performs better in networks where number of wavelength per fiber is large, or in networks with sparse wavelength conversion.