A companding technique is proposed to reduce the peak-to-average-power ratio of orthogonal frequency division multiplexing (OFDM) signal in this paper. The probability density function of the amplitude of OPDM signal is determined. Because of the Gaussian distribution of OFDM signal, companding technique can be quite effective, since large OFDM signal only occurs infrequently. The peak-to-average power ratio of an OFDM system and the optimal companding coefficient are determined in this paper. Symbol error rate of the systems after the companding is derived. The performances of the system with and without the companding are also compared.