Most modern integrated circuit transceivers, especially wireless LAN, utilize a direct conversion radio architecture, which is highly advantageous from the perspectives of cost and flexibility, there exist several performance impairments, including gain and phase imbalances between the in-phase (I) and quadrature (Q) of a transmitter or receiver. Disclosed herein is a signal processing methodology and system for compensation of I/Q imbalance for a direct conversion packet-switched OFDM communications system. The imbalance, which accounts for transmitter I/Q imbalance, RX I/Q imbalance, phase/frequency error, and dispersive multipath fading. Both frequency dependent I/Q imbalance and frequency independent cases are considered, covering both wideband and narrowband modulation. The proposed estimation algorithms operate within the fully compliant framework of existing multi-user OFDM radio standards (WLAN, LTE, WimAX). These algorithms accurately estimate and correct transceiver I/Q imbalance on a packet-by-packet basis, all within the receiver's digital baseband.