Abstract: A nonlinearity compensation technique for a CO-OFDM transmission system in which a proportion (e.g. up to 50%) of OFDM subcarriers is transmitted along with a phase-conjugate copy (PCP) on another subcarrier (replacing a data carrying subcarrier) to enable nonlinear distortion compensation. Nonlinear distortion experienced by closely spaced subcarriers in an OFDM system is highly correlated. The PCPs are used at the receiver to estimate the nonlinear distortion (e.g. nonlinear phase shift) of their respective original subcarriers and other subcarriers close to the PCP. With this technique, the optical fibre nonlinearity due to the Kerr effect in OFDM systems can be effectively compensated without the complexity of DBP or 50% loss in capacity of the phase conjugate twin wave (PC-TW) technique. Moreover, the technique proposed herein can be effectively implemented in both single polarization and PMD systems, in both single channel and WDM systems.