In this paper, an encryption algorithm based on three-dimensional Arnold transform and chaotic Frank sequence is proposed, which is used to deal with low data security and excessive peak-to-average power ratio (PAPR) in orthogonal frequency division multiplexing passive optical network (OFDM-PON) systems. The algorithm uses the chaotic sequence generated by the conservative digital chaotic system based on the principal component analysis to encrypt, which can solve the degradation problem caused by the chaotic sequence structure and calculation accuracy. First, the OFDM signal is converted into a three-dimensional signal matrix, and the three-dimensional Arnold transform is used to perform scrambling transformation to realize the encryption of the data; then, the encrypted data is passed through the Frank sequence randomly selected by the chaotic sequence to reduce the PAPR of the OFDM signal. The simulation experiment results show that, compared with the traditional OFDM-PON algorithm, When the probability in the complementary cumulative distribution function is 10 ^-3, the algorithm can reduce the PAPR of the signal by about 2.1 dB, and when the bit error rate is 3.8×10 ^-3, the received optical power can be reduced by about 1 dB.