In this paper, an M-ary pulse-amplitude modulation (PAM) coded optical code division multiple access (CDMA) system applying the chip-level receiver with M-level threshold detection is proposed. First, in order to increase the number of transmitted bits per pulse, the PAM coded system is considered. However, when the correlator is applied in the receiver, the multiple access interferences (MAIs) with high intensities deteriorate the system performance significantly even if the number of MAIs is small. Consequently, the chip-level receiver with M-level threshold detection instead of the correlator in the M-ary PAM-CDMA system is proposed. The proposed system can obtain the synergistic effect between the PAM and the chip-level receiver, in which the chip-level receiver reduces more MAIs compared with the correlator and the PAM has the larger number of transmitted bits per frame than ON-OFF keying (OOK). As a result, the proposed system can increase the code length and the number of weights, and achieves higher tolerance to MAIs than the OOK-CDMA system with the chip-level receiver under the condition in which the chip duration, the bit rate, and the number of subscribers are kept constant. It is shown that the proposed M-ary PAM-CDMA system with the chip-level receiver achieves better bit error probability (BEP) than the OOK-CDMA system with the chip-level receiver.