Abstract Atmospheric turbulence induced fading may severely impair free-space optical (FSO) communication systems, affecting the quality of the propagated laser beam and lead to significant performance degradation. Recent research works reveal that performance can be improved by using orthogonal FDM. In this paper, an analytical approach is presented to evaluate the bit error rate performance of an OFDM FSO link with optical intensity modulation and coherent homodyne receiver taking into consideration the effect of strong atmospheric turbulence. The turbulence effect is modeled as gamma-gamma distribution and the performance results are evaluated in terms of average CNR and BER. Power penalty suffered by the system due to the effect of turbulence at a given BER is evaluated for several system parameters viz. link distance, turbulence parameter, local oscillator power etc. It is noticed that effect of turbulence can be significantly reduced by increasing the number of OFDM subcarrier. For example, power penalty for BER of 10–9 at a link distance of 3,600 m is 6 dB when number of subcarrier is 4 and can be reduced to 0.5 dB by increasing the number of subcarrier to 64. In addition, by utilizing coherent optical receiver and synchronous demodulation at the receiving end, we have introduced local oscillator (LO) for both Optical and RF state which have ability to track the signal’s phase changes over time relative to the LO’s phase and helps the system to remain stable.