Due to the high peak-to-average power ratio (PAPR) and the very close sub-carrier spacing for coherent optical orthogonal frequency division multiplexing (CO-OFDM) system, the sub-carriers walking-away resulted by link dispersion greatly affects the nonlinear damage of the optical fiber. We firstly study the nonlinear damage and system performance of CO-OFDM system without/with dispersion compensating optical fiber (DCF) under the conditions of different distributions of dispersion and different residual dispersion. For the single channel 40 Gb/s CO-OFDM system, the Q factor of DCF link is 5.1 dB higher than that of completely compensated DCF link. For DCF link, when the residual dispersion is added from 0 to 1200 ps/nm, the maximum Q factor is improved by 4 dB, and the nonlinear threshold is increased by 4 dBm. When the residual dispersion is 1200 ps/nm, the performance of DCF link system is almost the same as the system without DCF.