The phase locked loop is often used in lieu of an FM discriminator because of its threshold extension capabilities. In many applications, such as in communication satellites, not only is a low threshold required, but also a high SNR. CCIR recommendations suggest an output SNR of more than 40 dB. At this output SNR the intermodulation distortion present in a phase locked loop becomes very important. This paper discusses the intermodulation distortion present in a phase locked loop and determines the effect of the system parameters on this IM distortion. One of the main purposes of the paper is to show that, in order to decrease the IM distortion, the ratio of input frequency deviation to the loop gain of the phase locked loop should be decreased. Experimental results verified the proposed theory. The IM distortion was less than -44 dB when the frequency deviation to loop gain ratio was less than 0.057 (for the test model).