A heterodyne communication system uses coherent data modulation that is resistant to phase noise. In particular, a pilot tone and reference clock signal are transmitted along with the modulated data to form the basis of an electrical demodulation local oscillator at the receiver. The pilot tone and/or reference clock signal carry phase noise which is correlated with the phase noise in the data signal. At the receiver, the local oscillator is generated from the pilot tone and reference clock signal in a manner so that the local oscillator also has phase noise which is correlated with the phase noise in the data signal. Thus, the two noise components can be used to cancel each other during demodulation of the data signal using the local oscillator.