In this letter, the third-order intermodulation (IM3) due to the dual-electrode Mach-Zehnder modulator for generating optical double-sideband (ODSB) signals is analyzed by incorporating fiber dispersion. The resulting signal-to-noise and distortion ratio (SNDR) at appropriate input power is additionally investigated in order to optimize the performance of the entire system. It is observed that the power of IM3 is seen to degrade faster than that of the fundamental power as fiber dispersion increases. Thus, SNDR for ODSB signals increases due to the fiber dispersion, until the power of IM3 is greater than that of the additive noise level. Thus, the optimum power of the input signal is found to be sensitive to the fiber dispersion while the optimum SNDR is found to be independent of fiber dispersion.