This paper demonstrates a novel approach to reducing in-band nonlinear distortion in DML-based OFDM transmission by introducing a frequency gap between the optical carrier and signal band. This scheme greatly increases tolerance to nonlinear distortion caused by the interaction between laser chirp and chromatic dispersion. Tuning the frequency gap between 2 to 5 GHz (in accordance with the transmission distance) makes it possible to mitigate a considerable proportion of dispersion-induced nonlinear distortion. Experiment results revealed that the proposed scheme can increase the achievable data rate by up to 136%, compared to conventional OFDM over 300 km of dispersion-uncompensated standard single mode fiber. Following transmission over more than 200 km, the proposed modulation scheme also outperforms conventional OFDM incorporating with a Volterra equalizer by up to 24%. We also conducted optimization of DML bias current and driving voltage. Our results show that operating at high bias and driving voltage can greatly improve data rates following the mitigation of distortion via gapped OFDM.