In this paper, a novel companding scheme is proposed to reduce the peak-to-average power ratio (PAPR) of lattice orthogonal frequency division multiplexing (LOFDM) system. By transforming the statistics of original signals into a specified distribution form, which is defined by a continuous sine function, this scheme can achieve a simple companding form as well as an improved PAPR and bit-error-rate (BER) performance. Moreover, by introducing the variable companding parameters in the desired probability density function (PDF), a great design flexibility in the companding form and an effective trade-off between the PAPR reduction and BER performance can be achieved to satisfy various system demands. The general formulas of the proposed scheme are derived and a theoretical analysis regarding the achievable transform gain and the selection criteria of companding parameters are also conducted. Simulation results show that the proposed scheme can substantially outperform the conventional μ-law companding, exponential companding (EC), piecewise companding (PC) in terms of PAPR reduction, BER performance and bandwidth efficiency.Keywords: lattice orthogonal frequency division multiplexing (LOFDM), nonlinear companding transform, peakto-average power ratio (PAPR) MSC ® (2010). 94A12