In this paper, a companding technique is proposed to effectively reduce the peak-to-average power ratio (PAPR) in single-carrier frequency division multiple access (SC-FDMA) systems. By companding the samples with large amplitudes, while enhancing those with small amplitudes, a significant reduction in the PAPR can be achieved. The performance of the proposed SC-FDMA with companding system is studied and compared with that of the standard SC-FDMA system. Simulation results show that the SC-FDMA with companding system has a lower PAPR when compared with the conventional SC-FDMA system, while the complexity of the system slightly increases. Results also reveal that the companding coefficient must be chosen carefully in order to limit the PAPR without introducing degradations into the bit error rate performance.