AbstractSpectrally efficient 16 quadrature amplitude modulation‐orthogonal frequency division multiplexing (QAM‐OFDM) system using specifications of commercially available high‐power phosphorous coated LED (PLED) is proposed in this study. To address the challenges of signal attenuation and limited bandwidth, systems integrated with a band pass filter (BPF) after the photodetector and optical preamplifier. The effect of BPF bandwidth and preamplifier gain on the performance of 16 QAM‐OFDM system have been investigated. Results demonstrated that 375 MHz bandwidth evaluated from 1.5 × symbol rate, offered an optimum performance achieving minimum bit‐error‐rate of 3.05 × 10−4. For preamplifier gain of 20 dB, we achieved a maximum distance of 3 m which is limited to 1.5 m for lower gain values. With BPF‐optimized bandwidth and a preamplifier gain of 20 dB, we have achieved a data rate of 5 Gbps for maximum distance up to 2 m while considering the super‐forward‐error‐correction limit of 1.863 × 10−2. With data rate of 6 and 7 Gbps, the distance lower down to 1.8 and 1.5 m, respectively.