This paper presents an optical communication system algorithm with intensity modulation and nonlinear heterodyne detection. The computational results show that optical communication system with nonlinear heterodyne detection using semiconductor lasers （such as DFB or DBR one） with linewidth of tens of MHz without line-narrowing provides performance inferior to that of coherent detection （zero linewidth） shot noise limit about 6dB

and superior to that of direct detection system about 7

1

3 dB at 100 Mbit/s and 10

2

1 dB at 1 Gbit/s.