A compensation scheme for transmitter (Tx) and receiver (Rx) I/Q imbalance with the interference of carrier frequency offset for CO-OFDM transmission is demonstrated. It has low over-head using only two specific designed symbols for Rx side I/Q imbalance and two for that of Tx side, respectively. Rx compensation is performed in time domain after OFDM frame synchronization and the Tx I/Q imbalance is compensated in frequency domain after channel and phase estimation. The bit error rate (BER) and Q improvement are evaluated experimentally to demonstrate the effectiveness of compensation algorithms. This scheme performs better with the increase of OSNR.© (2010) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.