In this paper, we analyze the effects of IQ (In-phase/Quadrature-phase) imbalance at both transmitter and receiver of OFDM (Orthogonal Frequency Division Multiplexing) system and show that more diversity gain can be achieved even though there are unwanted IQ imbalance. When mixed sub-carriers within an OFDM symbol due to the IQ imbalance undergo frequency selective channels, additional diversity effects are expected during the demodulation process. Simulation results on the symbol error rate (SER) performance with ML (Maximum Likelihood) and OSIC (Ordered Successive Interference Cancellation) receiver show that significant performance gain can be achieved with the diversity gain caused by the IQ imbalance combined with the frequency selective channels.