SummaryThis paper proposes a new companding scheme called three ‐law companding to reduce the peak‐to‐average power ratio (PAPR) in a universal filtered multicarrier system. The proposed scheme is more flexible and provides better PAPR reduction and bit error rate (BER) through the selection of the three companding parameters. However, the proposed scheme suffers from high side lobes and increases the power of the companded signal. Hence, an enhanced three ‐law, which overcomes these limitations, is proposed. Unlike the first scheme, the enhanced scheme does not change the mean power of the companding signal because it incorporates power‐level normalization. Simulation results show that, compared with other companding transforms, the proposed enhanced three ‐law scheme offers better BER characteristics and side‐lobe level suppression. It also provides better PAPR reduction of 7.4 dB and net gain of 6.3 dB. The proposed enhanced three ‐law was evaluated over a multipath fading channel and was more robust than other companding techniques. Finally, the proposed enhanced algorithm was verified in real time using the Wireless Open‐Access Research Platform.