ABSTRACTFree space optical (FSO) communication is a proficient technology with potential applications in the next generation of wireless communication. This article evaluates the performance of the FSO system under inverse Gaussian gamma (IGG) fading. A novel closed‐form equation for the cumulative distribution function (CDF) of the received signal‐to‐noise ratio (SNR) is presented by employing an intensity modulation/direct detection (IM/DD) scheme. The analytical expressions for various performance metrics such as outage probability (OP), amount of fading (AOF), and average bit error probability (ABEP) are derived for various digital modulation schemes based on the system's probability density function (PDF) and CDF. Additionally, this article presents an upper bound on OP and asymptotic analysis for the performance metrics to gain deeper insights. It is revealed that the small‐scale eddy turbulence parameter can affect the diversity order by a factor of β/2. The results demonstrate that atmospheric turbulence considerably reduces the system's performance. Finally, Monte‐Carlo simulation is performed to ascertain the correctness of the derived mathematical expressions.