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Due to the spectacular growth of the wireless services and demands in recent years, Orthogonal Frequency Division Multiplexing (OFDM) is a latest and suitable modulation scheme for commercial high-speed broadband wireless communication systems. OFDM is one of the main techniques proposed to be employed in 4th Generation Wireless Systems. One of the OFDM key parameters is a cyclic Prefix (CP). Cyclic prefix is a guard time length padded with every OFDM symbol to completely alleviate Inter-symbol Interference (ISI) and to preserve orthogonality among OFDM subcarriers as long as the guard time length is sufficiently greater than channel delay spread. This paper analyzes OFDM system and the effect of cyclic prefix and length of cyclic prefix on OFDM system. Besides, compare the performance of the system with and without cyclic prefix. The simulations were carried out over AWGN and Rayleigh fading channels, and the results have been compared with the theoretical ones.