Optical orthogonal frequency division multiplexing (OFDM) system combines the advantages of both wireless OFDM and optical fiber technology, thus has high spectral efficiency and can effectively resist polarization mode dispersion and chromatic dispersion in fiber link. However, high peak-to-average power ratio (PAPR) is one of the important shortcomings of optical OFDM system, which requires not only amplifiers with a greater dynamic range, but also leads to serious fiber nonlinear effect. So how to reduce PAPR of optical OFDM system is a crucial issue. This work, aiming to reduce PAPR and improving system BER, analyzes suppression technology of PAPR based on optical OFDM system. Firstly, to improve BER, we utilize Partial Transmit Sequence (PTS) algorithm which introduces phase factors b<sup>(v)</sup> multiplying IFFT converted signals and searches a b<sup>(v)</sup> which will make PAPR minimum. But this method needs much calculation. Then we exploit companding which can compress amplitude of big OFDM signals and expand small signals. Secondly, simulating the two algorithms respectively and finding two algorithms can suppress PAPR, but the effect has room for improvement. Therefore, an implementation of PTS and companding joint algorithm is proposed, then simulating this method and adding it into optical OFDM system. A system was set up, fiber length setting as 10km, utilizing a MZM modulator and a distributed feedback laser, taking 4QAM and 512points IFFT. The results show that, joint algorithm can reduce PAPR from about 12dB to 8dB, improving the problem of high PAPR, constellation convergence, enhances optical OFDM system transmission performance.