Analysis and compensation methodology of the AM-AM and AM-PM distortion of cascode class-E power amplifiers are presented. A physical-based model is proposed to illustrate that the nonlinear capacitance and transconductance cause the AM-AM and AM-PM distortion when modulating the supply voltage of the PA. A novel methodology that can reduce the distortion is also proposed. By degenerating common-gate transistor into a resistor, the constant equivalent impedance is obtained so that the AM-AM and AM-PM distortion is compensated. An experimental prototype of 2.6 GHz cascode class-E power amplifier with the AM-AM and AM-PM compensation has been integrated in a 0.18 μm CMOS technology, occupies a total die area of 1.6 mm2. It achieves a drain efficiency of 17.8% and a power-added efficiency of 16.6% while delivering 12 dBm of linear output power and drawing 31 mA from a 1.8 V supply. Finally, a co-simulation result demonstrated that, when the distortion of the PA has been compensated, the EVM is improved from −17 dB to −19 dB with an IEEE802.11a-like signal source.