This thesis investigates the effect of the cavity vacuum field on the dispersive properties of an atomic ensemble in a strongly coupled high-finesse cavity. In particular, we demonstrate vacuum-induced transparency (VIT). The light absorption by the ensemble is suppressed by up to 40% in the presence of a cavity vacuum field. The sharp transparency peak is accompanied by the reduction in the group velocity of a light pulse, measured to be as low as 1800 m/s. This observation is a large step towards the realization of photon number-state filters, recently proposed by Nikoghosyan et al. Furthermore, we demonstrate few-photon optical nonlinearity, where the transparency is increased from 40% to 80% with ∼12 photons in the cavity mode. The result may be viewed as all-optical switching, where the transmission of photons in one mode may be controlled by 12 photons in another. These studies point to the possibility of nonlinear interaction between photons in different free-space modes, a scheme that circumvents cavity-coupling losses that plague cavity-based quantum information processing. Potential applications include advanced quantum devices such as photonic quantum gates, photon-number resolving detectors, and single-photon transistors.

In the efforts leading up to these results, we investigate the collective enhancement of atomic coupling to a single mode of a low-finesse cavity. With the strong collective coupling, we obtain exquisite control of quantum states in the atom-photon coupled system. In this system, we demonstrate a heralded single-photon source with 84% conditional efficiency, a quantum bus for deterministic entanglement of two remote ensembles, and heralded polarization-state quantum memory with fidelity above 90%.