The invention relates to a coding method and system capable of reducing peak-to-average power ratio in an OFDM system, and relates to the technical field of optical communication. A sending end and a receiving end are respectively provided with a basis matrix based on ZC sequence, wherein the basis matrixes are subjected to cyclic shift to obtain different cyclic matrixes; at the sending end, data to be sent is multiplied by different cyclic matrixes to obtain peak-to-average power ratios after calculation, the group of data having the lowest peak-to-average power ratio is selected for transmission, and meanwhile, information about how to obtain the cyclic matrixes serves as auxiliary information and is transmitted along; and at the receiving end, the auxiliary information in the received data is extracted, the cyclic matrixes selected by the sending end is obtained according to the auxiliary information and the basis matrixes, inverse transform is carried out on the cyclic matrixes to obtain inverse matrixes, and the inverse matrixes are multiplied by the received data to obtain decoded data. The method and system reduce PAPR effectively; calculation amount and transmitted additional information are small; and system cost is reduced favorably.