Dense Wavelength Division Multiplexing (DWDM) passive optical network represents the most promising solution for future access networks. Wavelength sharing is an important issue in DWDM based optical access networks(OAN), since it can maximize the resource utilization and in return reduce the cost of the system. In this paper we propose a neighbor-sharing dynamic wavelength assignment algorithm for a DWDM-based virtual start optical network. The wavelength assignment algorithm is realized through a centralized scheduler, which is at central office. When the scheduler receives the request, it assigns a wavelength to the corresponding premise according to the algorithm. Two level scheduling scheme of control signal is proposed. The evaluation and analysis of the performance of the wavelength assignment algorithm are conducted by using computer simulations and are presented at the end of this paper.