A novel digital coherent transmission system based on dual polarization quadrature amplitude modulation (DP-QAM) is proposed. In this system, a DP-QAM signal and twin local lights are generated from one continuous wave (CW) light source, and transmitted simultaneously. Because optical phase noise is canceled in the proposed receiver, linewidth tolerance is improved without using a coherent light source in the receiver. The proposed scheme successfully demodulates a 3.125-GBd DP-quadrature phase shift keying (i.e., DP-4-QAM) signal. After 50-km transmission, no degradation in bit error rate was observed even at the linewidth of 45 MHz.