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Orthogonal frequency division multiplexing (OFDM) is much sensitive to carrier frequency offset (CFO).CFO distorts the orthogonality between subcarriers resulting in intercarrier interference (ICI). In this paper, an improved CFO estimation and correction by using a dual bandwidth and clustered pilot tones are proposed. The dual bandwidth scheme is used for acquisition and tracking process in phase locked loop (PLL) for CFO tracking [24]. The dual bandwidth scheme leads to rapid acquisition and good tracking in the presence of noise for PLL by using conventional pilot tone. The dual bandwidth scheme reduces the acquisition time of PLL which makes the system faster and improves the bit error rate (BER). The BER is reduced by about 0.7 -11 dB but it suffers from a residual CFO. In this paper, the dual bandwidth scheme is improved by using clustered pilot tones. The BER is reduced again by about 1-2 dB. It estimates and compensates the CFO up to 40% of the subcarrier spacing for 16-QAM modulation. The simulation is done for the additive white Gaussian noise (A WGN) and multipath Rayleigh fading channel.