The ideal behavior of communication system requires a single frequency carrier. In optical communication system, light is used as a carrier. Practical laser source has a finite linewidth due to variations in the frequency of operation, hence, resulting in undesired phase perturbations in the signal whereas the ideal requirement is the delta function spectral shape at the carrier frequency. The spectral shape gets broadened due to phase noise and is modeled as lorentzian shape. Linewidth is a measure of stability of laser phase noise with time. Coherent Optical Orthogonal frequency division multiplexing (CO-OFDM) along with the spectrally efficient Quadrature Amplitude Modulation (QAM) formats is emerging as one of the best solutions for future high speed fiber transmission systems. Though the coherent, receivers have advantages in terms of sensitivity and selectivity, laser phase noise is the main limitation of such systems as the laser phase noise further causes common phase rotation of all the subcarriers per symbol and also results in inter carrier interference. QAM formats are also susceptible to laser phase noise. Phase noise in coherent systems is governed by laser linewidth. Hence, it is very important to investigate the impact of laser linewidth in CO-OFDM systems. This paper investigates the tolerable laser linewidths for different QAM formats in a 40 Gbps COOFDM system.