Orthogonal Frequency Division Multiplexing (OFDM) is a technique that divides a frequency band into a number of orthogonal (i.e.,parallel) narrowband sub-channels.Frequency. A single data stream is divided into several paralleled stream and each of the data stream(or sub-set) is multiplied by either a specific carrier frequency or code and then all the parallel data stream is combined together using IFFT to make OFDM symbol for transmission. If each individual parallel data is multiplied by frequency then it is called OFDM. OFDM is a special type of frequency division multiplexing (FDM). Unlike FDM, signals are not multiplied by a single carrier in OFDM- each sub-set of carrier creates a sub-channel for communication which has the advantage of less prone to interference since each sub-carrier frequency is kept orthogonal to each as other.

Thus, huge bandwidth efficiency due to reduced carrier spacing (orthogonal carriers overlap), simple Equalization simplified, or eliminated, OFDM signals are resistant to fading, scalable data transfer rate in different channel conditions, single frequency Networks are possible (broadcast application) OFDM is a Multi-Carrier Modulation technique in which a high rate bit-stream is split into (say) N parallel bit-streams of lower rate and each of these are modulated using one of N orthogonal sub-carriers. For a given bandwidth, the symbol rate for a single carrier transmission is very high, where as for OFDM signal it is N times lower, where N is the number of subcarriers used. The lower symbol rate leads to low ISI. Also using guard period at the start of each symbol removes any ISI shorter than its length. If the guard period is long enough, then all the ISI can be removed.