In this paper, a novel technique based on flipped-exponential (FE) Nyquist pulse method is proposed for peak-to-average power ratio (PAPR) reduction in optical direct detection orthogonal frequency-division multiplexing (DD-OFDM) system. The method is based on a proper selection of the FE Nyquist pulses for shaping the different subcarriers of the OFDM. We experimentally demonstrated an optical DD-OFDM transmission system with this novel technique to achieve significant improvement in PAPR reduction in the optical OFDM system. The received sensitivity of the OFDM signal after suffered from strong nonlinear effects in standard single-mode fiber (SMF) has been experimentally investigated.