This paper discusses the error performance of Space- Time Trellis Code system over fading channels. Multiple-input multiple-output (MIMO) technology constitutes a breakthrough in the design of wireless communications systems, and is already at the core of several wireless standards. It offers high data rate and excellent throughput of wireless communication system. Trellis-code modulation (TCM) is one of the bandwidth efficient coding modulation techniques used in digital communications system. Here we discuss the design criteria for fading channels, employs that transmit and receive antenna diversity. It is observed from the simulation results that the code performance is improved by increasing the number of states. Also it provided the coding advantage as the number of states and receives antennas increases. The simulation have been conducted for 4 Phase Shift Keying (PSK) with data rate 2 b/Hz/s for two transmit and two receive antennas (NT=NR=2) system, provided better performance using 64 states STTC encoder. © 2011 Springer-Verlag Berlin Heidelberg.