Abstract: Polarization dependent loss (PDL) and polarization mode dispersion (PMD) in direct detection optical orthogonal frequency division multiplexing (DDO-OFDM) system influence performance seriously in high speed transmission. The mathematical model and mechanism of transmission were analyzed in DDO-OFDM systems. Analysis and simulation results show that, PDL and PMD may bring amplitude and phase noise which could be eliminated by signal equalization. Meanwhile, PMD may mitigate the effect of PDL because of the rotation of the state of polarization（SOP）. The system Q value is improved by about 0.8 dB for 480 km distance and speed of 10 Gbit/s transmission through standard-single-mode fiber (SSMF) with the differential group delay (DGD) of 50 ps.