To meet rapidly growing customer-traffic demands, passive optical networks (PONs) have been widely applied in optical access networks. However, one common imperfection of the commercially deployed PON is that the maximum rate is limited by the optical power budget of the worst-case optical network unit (ONU). If the current infrastructure is to continue into the future 100 Gb/s PON, the optical power budget of the worst-case ONU probably cannot meet the requirement for the 100 Gb/s data transmission. In this paper, we propose a new 100 Gb/s fine-granularity flexible-rate (FGFR) PON based on discrete multi-tone (DMT) with peak-to-average power ratio (PAPR) optimization. The FGFR DMT-PON frame integrates the DMT subframe with time-division multiple access to achieve higher overall throughput. Each ONU is able to achieve the maximum data rate depending on its optical power budget. A high PAPR is a big obstacle to the practical applications of the DMT in the PON. We use the joint clipping operation and clipping-noise-cancellation algorithm to mitigate the high PAPR for the DMT signal. The experimental results show that the FGFR DMT-PON can achieve a wide-range data-rate adjustment from 25 to 100 Gb/s with a potential granularity of 50 Mb/s under the optical power budget from 36 to 26 dB.