We demonstrate, to the best of our knowledge, the first bismuth-doped fiber laser operating at 1.7 μm mode-locked by means of Kerr nonlinearity. The laser setup has a figure-of-eight all-fiber design with a nonlinear amplifying loop mirror (NALM) and yields 17 ps pulses with a 3.57 MHz repetition rate and the energy 84 pJ. Using the master oscillator power amplifier scheme with a bismuth fiber amplifier, the output pulse energy of 5.7 nJ was achieved. Further pulse compression in the fiber compressor shortened pulses to 630 fs. The operation of the master oscillator was modeled using the nonlinear Schrödinger equation. Calculated data are in good agreement with experimental results.