In this paper, we propose a new peak-to-average power ratio reduction technique based on a constant envelope orthogonal frequency division multiplexing (CE-OFDM) approach to mitigate fiber induced nonlinearities in direct-detection optical OFDM (DDO-OFDM) systems. Simulation results show that the proposed 10 Gbps DDO-CE-OFDM system using 16-quadrature amplitude modulation (16-QAM), 2.66 GHz signal bandwidth, and different values of electrical phase modulation index outperforms DDO-OFDM systems as it increases the fiber nonlinearity tolerance in fiber links without optical dispersion compensation. The bit error rate of the proposed transmission scheme is decreased by a factor of 1000 if compared to conventional DDO-OFDM systems, for 10 dBm of optical input power and considering a span of 960 km of standard single-mode fiber.