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A passive optical network based on orthogonal frequency division multiplexing (OFDM-PON) gives improved performance for high speed optical access network due to its greater resistance to fiber dispersion and higher bandwidth efficiency. In optical fiber communication, chromatic dispersion (CD) is a linear distortion in fiber, but it is converted into nonlinear distortion due to square-law characteristic of photo diode detector at the receiver side resulting in degradation of performance. To compensate for this nonlinear distortion, we proposed to use a linearized receiver circuit with square root module (SRM) device which can improve the performance of system in terms of CD tolerance. In this paper, we have analytically analyzed the performance of OFDM-PON system with and without SRM device for direct-detection optical OFDM-PON (DDO-OFDM-PON) system. At BER of 10 −3 , which is the limit of forward error correction, there is 11.1 and 13.5 dB improvement in optical budget with SRM for downstream and upstream direction, respectively, as compared to conventional DDO-OFDM-PON system.