This paper presents Peak-to-Average Power Ratio (PAPR) and Bit Error Ratio (BER) performances of Constant Envelope Orthogonal Frequency Division Multiplexing (CE-OFDM) system over underwater acoustic channels. In OFDM transmission systems, OFDM signals suffer from high PAPR. However, CE-OFDM can eliminate the PAPR problems. The objective is to transform the OFDM signals to 0dB PAPR signals by way of phase modulation. Using Frequency-Domain Equalizer (FDE), it provides a simple technique to reduce the distortion in a frequency-selective fading underwater acoustic channel. The CE-OFDM system has been tested in a real underwater acoustic channel. The results of simulation and experiment show that the CE-OFDM system has satisfactory BER performances and it is applicable for signal transmission in underwater channel.