Underwater acoustic (UWA) communication is characterized by three major problems: attenuation that increases with signal frequency, time-varying multipath propagation, and the motion introduces additional Doppler spreading and shifting. Surface waves, internal turbulence, fluctuations in the sound speed, and other small-scale phenomena such as the background noise, which is the ambient noise contribute to random signal variations. Path loss of an UWA communication channel depends not only on the transmission distance, but also on the signal frequency. As a result, the useful bandwidth depends on the transmission distance. This feature distinguishes the underwater acoustic system from a terrestrial radio one and influences the design of an UWA communication system.The contribution achieved by this thesis, is to design and simulate a system for UWA communications. Where, an orthogonal frequency division multiplexing (OFDM) is used because of its ability to handle multipath. In order to reduce Doppler Effects and improve data rate, differential quadrature phase shift keying (DQPSK) is used as a coding technique. Based on this analysis the designed system is evaluated. To overcome the limited bandwidth in the UWA channel and enhance the performance of the system, MIMO technique is used, which provide gain in data rate while keeping the transmission bandwidth constant.This system was simulated using matrix laboratory (MATLAB).The performance of the designed system was evaluated under different environmental parameters of the UWA channel. The best system improvement was achieved when using 4×4 array of hydrophones because it require 23 dB to get BER of 10−4 while when using SISO it require 27 dB to achieve the same BER under the same UWA channel conditions. In addition, the data rate of the designed system was increased, which is approximately 4 times the data rate of SISO system.