A theoretical analysis is presented to evaluate the bit error rate (BER) performance of a direct sequence optical code division multiple access (DS-OCDMA) system with dispersion shifted fiber (DSF) considering the effect of four wave mixing (FWM). To verify the analytical expression of BER, the BER performance is evaluated using Matlab simulation with 63 chips per bit m-sequence as well as Gold sequence and compared with analytical results. It is investigated that simulation and analytical results are similar in all cases. Further, BER performance is evaluated for 1023 chips per bit encoding using analytical expression. The BER performance is found to be degraded due to FWM effect if the transmitted power per channel and number of simultaneous users are increased. It is investigated that maximum allowable transmitted power per channel is limited due to FWM effect. It is found that the maximum allowable transmitted power per channel is limited to 15dB for 10 users and 20dB for 20 users for a 100Mb/s, 1000km system with 1023 chips per bit encoding at a BER of 10–9.