This paper presents propagation characteristics of short optical pulses and four-wave mixing (FWM) in semiconductor optical amplifiers (SOAs) for high conversion efficiency. For the simulation of pulse propagation in SOA, the nonlinear propagation equation is used for taking into account the gain spectrum dynamics, gain saturation which depends on carrier depletion, carrier heating, spectral hole-burning, group velocity dispersion, self-phase modulation and two photon absorption. Finite difference beam propagation method (FD-BPM) is used to solve the nonlinear Schrödinger equation and obtained the propagation characteristics of two optical pulses with different frequencies, which are simultaneously injected into the SOA.