The spectral amplitude coding based optical CDMA (Code Division Multiple Access) system has been analyzed for the random diagonal codes for incoherent optical communication system. An investigation of detrimental effects on OCDMA is presented, showing the effect of effective power from each user, code weight, data rate on bit error rate and signal to noise ratio of the system. The simulated performance of intensity modulation technique is presented using 80 MHz electrical bandwidth at 1550 nm. The performance evaluation has been done using MATLAB in terms of SNR and BER as a function of different code and system parameters.