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Part 1 of this paper provided an overview of smart-antenna systems, and presented a planar array as a design example. In addition, Part 1 discussed the potential of smart antennas with regard to providing increased capacity in wireless communication networks. Part 2 introduces the signal-processing aspects of the antenna array. In particular, it describes the utility of direction-of-arrival algorithms in array-antenna systems, and gives an overview of the signal-processing algorithms that are used to adapt the antenna radiation pattern. The adaptive-algorithm descriptions are accompanied by simulation results obtained for a specific network topology. In particular, the antenna system is simulated assuming a mobile network topology that is continuously changing. Basic results presented are the dependence of the overall network throughput on the design of the adaptive-antenna system, and on the properties of the adaptive-beamforming algorithms and associated antenna patterns.