The invention discloses a compensation method of an OFDM (Orthogonal Frequency Division Multiplexing) 60GHz MMW radio on fiber system. The compensation method comprises the following steps; firstly acquiring the initial estimation of a channel from a time domain, and then improving the channel precision from the frequency domain by using the finite alphabet set feature of a signal. By using the compensation method disclosed by the invention, the high-precision channel estimation can be obtained without needing the long data accumulation and performing the complex computation of the singular value decomposition or full permutation.