A companding technique using the hyperbolic tangent transform is proposed for reducing the peak-to-average-power ratio (PAPR) of orthogonal frequency division multiplexing (OFDM) signals. This technique is practical and can be implemented easily in integrated circuit design. The PAPR value of an OFDM system and the optimal companding coefficient to attain the minimum quantization error are derived. Error probability performance of the system after the companding is evaluated. Our simulation results exhibits that the system with the suggested scheme has nearly the same performance as the systems with the µ-law or A-law companding techniques.