Abstract: Peak cancellation is a widely-used technique to reduce peak-to-average power ratio (PAPR) in orthogonal frequency division multiplexing (OFDM) systems. However, peak cancellation, when implemented with a window function in time domain, will introduce in-band distortion and out-of-band radiation due to the nonlinear processing. In this paper, the spectral distribution of cancellation noise is analyzed based on a Bussgang nonlinear processing model, which is applied to the noise-aided decoder at the receiver side. The theoretic results are compared with the numeric simulation, and the BER performance is provided.