In this paper, we report experimental results on the development and improvement of the physical layer functions of a filter bank multicarrier with off-set quadrature amplitude modulation (FBMC/OQAM) transceiver using a testbed implemented with programmable software-defined radio (SDR). The developed physical layer approach is similar to the IEEE 802.11a standard, and it has been tested for timing synchronization, carrier frequency offset (CFO) correction, channel estimation and equalization. An investigation into the inherent intrinsic imaginary interference in FBMC/OQAM has been carried out, with initial findings indicating the seriousness of the effect of phase noise (PN). The conventional pilot structure used in IEEE 802.11a cannot be directly applied to FBMC/OQAM, thus, a specially designed pilot scheme is proposed to deal with the residual phase error. Three phase noise estimation schemes have been evaluated, namely phase noise compensation (PNC), extended Kalman filter (EKF) and modified blind phase searching (MBPS) methods. To further suppress the residual interference and enhance the phase error correction, an iterative technique is used after the pilot equalization. The performance of the proposed methods has been evaluated experimentally and via simulation for an indoor environment. The results verify the capabilities of the proof-of-concept transceiver and the developed physical layer functions.