Identity-related security issues inherently present in passive optical networks (PON) still exist in the current (1G) and next-generation (10G) Ethernet-based passive optical network (EPON) systems. We propose a mutual authentication scheme that integrates an NTRUsign digital signature algorithm with inherent multipoint control protocol (MPCP) frames over an EPON system between the optical line terminal (OLT) and optical network unit (ONU). Here, a primitive NTRUsign algorithm is significantly modified through the use of a new perturbation so that it can be effectively used for simultaneously completing signature and authentication functions on the OLT and the ONU sides. Also, in order to transmit their individual sensitive messages, which include public key, signature, and random value and so forth, to each other, we redefine three unique frames according to MPCP format frame. These generated messages can be added into the frames and delivered to each other, allowing the OLT and the ONU to go ahead with a mutual identity authentication process to verify their legal identities. Our simulation results show that this proposed scheme performs very well in resisting security attacks and has low influence on the registration efficiency to to-be-registered ONUs. A performance comparison with traditional authentication algorithms is also presented. To the best of our knowledge, no detailed design of mutual authentication in EPON can be found in the literature up to now.