Abstract One of the critical challenges in multicarrier‐based systems is peak to average power ratio (PAPR). Recently, Filter Bank Multicarrier (FBMC) is proved to be a promising candidate that can replace the traditional orthogonal multiplexing division (OFDM) scheme due to its better spectral efficiency, reducing both inter‐channel interference (ICI) and PAPR. Due to their advantages in reducing the PAPR without impacting the BER, the Hadamard transform was used in the proposed FBMC based VLC system. Furthermore, here, the discreet cosine transform (DCT) precoding is also used to boost the potential for PAPR reduction and the BER efficiency. The negative signals are not clipped off as in traditional asymmetrically‐clipped optical OFDM (ACO‐OFDM) signals to reduce the impact of large‐amplitude signal reduction nor add dc biasing for cancelling negative signals as in traditional DC‐biased optical OFDM (DCO‐OFDM) signals. Furthermore, a Clipping ratio is introduced to allow a trade‐off between bit error rate (BER) and PAPR reduction, and the optimal PAPR reduction is investigated. The obtained results show that the proposed FBMC based VLC system with DCT and clipping technique can reduce the PAPR and achieve good BER efficiency compared to the OFDM based VLC system.