Background: This paper shows how to suppress residual amplitude modulation (RAM) appeared in a commercial electro-optic modulator (EOM) to improve an iodine-frequency-stabilized laser diode (LD) using frequency modulation spectroscopy (FMS). Since the RAM of an EOM is affected by the temperature of the EOM, the DC-offset applied to the EOM and the polarization of the incident beam, it should easily fluctuate with drifts in temperature, applied voltage, and polarization. The fluctuation of the RAM of the EOM, which might decrease the frequency stability of the iodine-frequency-stabilized LD, must be eliminated by some means. Methods: In this paper, we present a theoretical analysis and experimental results to express the RAM error from the EOM in a LD frequency stabilization system near 633 nm using iodine-saturated absorption. A RAM compensation system, which actuates the temperature of the EOM and the DC-offset applied to the EOM, is constructed for the commercial EOM. Results: Using the RAM compensation system, the RAM is reduced to 10 − 4 order, and frequency stability of 3.67 × 10 − 11 for 1000 s is achieved for the LD. Conclusions: The proposed method can be applied for normal frequency stabilizing LDs, which use a commercial EOM and a low modulation index with FMS.