An optical phase noise suppression algorithm, LI-SCPEC, based on phase linear interpolation and sub-symbol processing is proposed for CO-OFDM system. By increasing the temporal resolution of carrier phase tracking through dividing one symbol into several sub-blocks, i.e., sub-symbols, inter-carrier-interference (ICI) mitigation is achieved in the proposed algorithm. Linear interpolation is employed to obtain a reliable temporal reference for sub-symbol phase estimation. The new algorithm, with only a few number of sub-symbols (N(B) = 4), can provide a considerably larger laser linewidth tolerance than several other ICI mitigation algorithms as demonstrated by Monte-Carlo simulations. Numerical analysis verifies that the best performance is achieved with an optimal and moderate number of sub-symbols. Complexity analysis shows that the required number of complex-valued multiplications is independent of the number of sub-symbols used in the proposed algorithm.