DFTS-OFDM has been proposed recently as an alternative to coherent optical OFDM due to its improved transmission performance. This paper proposes spectral shaping for DFTS-OFDM which reduces the PAPR leading to further improvement in nonlinear tolerance. It is shown that for both SSMF and LEAF, the optimized spectrally shaped DFTS-OFDM outperforms DFTS-OFDM for dispersion managed and unmanaged links by ~10.8% and ~6.8%, respectively. The number of bands and the excess bandwidth parameters are also investigated to optimize the transmission performance.