High-resolution optical coherence tomography (OCT) is of critical importance to disease diagnosis because it is capable of providing detailed microstructural information of the biological tissues. However, a compromise usually has to be made between its spatial resolutions and sensitivity due to the suboptimal spectral response of the system components, such as the linear camera, the dispersion grating, and the focusing lenses, etc. In this study, we demonstrate an OCT system that achieves both high spatial resolutions and enhanced sensitivity through utilizing a spectrally encoded source. The system achieves a lateral resolution of 3.1 μm and an axial resolution of 2.3 μm in air; when with a simple dispersive prism placed in the infinity space of the sample arm optics, the illumination beam on the sample is transformed into a line source with a visual angle of 10.3 mrad. Such an extended source technique allows a ~4 times larger maximum permissible exposure (MPE) than its point source counterpart, which thus improves the system sensitivity by ~6dB. In addition, the dispersive prism can be conveniently switched to a reflector. Such flexibility helps increase the penetration depth of the system without increasing the complexity of the current point source devices. We conducted experiments to characterize the system’s imaging capability using the human fingertip in vivo and the swine eye optic never disc ex vivo. The higher penetration depth of such a system over the conventional point source OCT system is also demonstrated in these two tissues.