Multicarrier transmission systems like orthogonal frequency division multiplexing (OFDM) support high data rate and generally require no equalization at the receiver, making them simple and efficient. This paper studies the design and performance analysis of a hybrid modulation system derived from multifrequency and MQAM signals, employed in OFDM. This modulation scheme has better bit error rate (BER) performance and exhibits low PAPR. The proposed hybrid modulator reduces PAPR while keeping the OFDM transceiver design simple, as it does not require any side information or a little side information (only one bit) to be sent and is efficient for arbitrary number of subcarriers. The results of the implementations are compared with those of conventional OFDM system. orthogonal frequency division multiplexing (OFDM), hybrid MQAM/LFSK modulator (HQFM), bit error rate (BER), peak to average power ratio (PAPR)