© 1983-2012 IEEE. This paper develops a theoretical analysis of the tradeoff between carrier suppression and nonlinearities induced by optical IQ modulators in direct-detection subcarrier multiplexing systems. The tradeoff is obtained by examining the influence of the bias conditions of the modulator on the transmitted single side band signal. The frequency components in the electric field and the associated photocurrent at the output of the IQ modulator are derived mathematically. For any frequency plan, the optimum bias point can be identified by calculating the sensitivity gain for every subchannel. A setup composed of subcarriers located at multiples of the data rate ensures that the effects of intermodulation distortion are studied in the most suitable conditions. Experimental tests with up to five QPSK electrical subchannels are performed to verify the mathematical model and validate the predicted gains in sensitivity.