In this paper, we describe a novel technique based on the flipped-exponential (FE) Nyquist pulse method for reducing peak-to-average power ratio (PAPR) in an optical direct-detection orthogonal frequency-division multiplexing (DD-OFDM) system. The technique involves proper selection of the FE Nyquist pulses for shaping the different subcarriers of the OFDM. We apply this technique to a DD-OFDM transmission system to significantly reduce PAPR. We also investigate the sensitivity of a received OFDM signal with strong nonlinearity in a standard single-mode fiber (SMF).