Unlike conventional CO-OFDM systems, we show in this paper that reduced-guard-interval (RGI) CO-OFDM systems experience subcarrier-dependent phase noise (PN) from the local oscillator laser. This phenomenon manifests in RGI-CO-COFM systems because the chromatic dispersion (CD) induced walk-off becomes comparable to the OFDM symbol length. We term this phenomenon the dispersion enhanced PN (DEPN). In this work an analytical study of the impact of DEPN on CO-OFDM transmission is conducted. We develop a system-level analytical model and calculate the variance of the dispersion-induced subcarrier-dependent phase rotation term (PRT) using two different distribution patterns of pilot subcarriers (PS). Moreover, we present a bit error rate (BER) estimator to quantify the system performance degradation due to PRT. Numerical simulations are then performed to verify the analytical model. Finally, we propose a grouped maximum-likelihood (GML) phase estimation approach to mitigate the DEPN impairment, and demonstrate a 0.7-1.7 dB SNR improvement at BER=10⁻³ for typical 100 Gb/s RGI CO-OFDM systems.