The work in this thesis addresses various modulation schemes suitable for optical wireless communication (OWC) system which are On-Off Keying (OOK), digital pulse time modulation (DPTM) and sub-carrier modulation. Performance of OWC system under various DPTM schemes are discussed; among these schemes are pulse position modulation (PPM), pulse interval modulation (PIM), and dual header pulse interval modulation (DH-PIM). Simulation results are presented to compare normalized transmission bit rate, slot error rate, and packet error rate among these schemes. A general DPTM scheme is proposed for OWC systems which encodes the information data using a combination of two (or more) of the conventional schemes (OOK, PPM, and PIM). The proposed scheme is quite general and reduces to the DPTM schemes reported in the literature as special cases. The proposed scheme also offers new modulation formats such as OOK/PIM, PPM/PPM, and PPM/PIM to enhance the performance of the (OWC) systems. These formats offer high bit rate which is around 8 times of PPM for PPM/PPM and around 16 times for PPM/PIM. General expressions are derived to assess the main features and parameters of the proposed scheme. The dynamic of the semiconductor laser are presented under various DPTM schemes. The results are obtained by solving the laser rate equation in the large signal regime. A simple indoor (OWC) system is constructed between two personal computers (PCs) to demonstrate the application of the DPTM schemes. Complete circuits are built for the transmitter and the receiver assuming PIM and DHPIM modulation formats. A software is written by MATLAB 6.5 to control the operation of the designed (OWC) system.