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A differential detection scheme for transmit diversity was proposed by Tarokh [V. Tarokh et al., IEEE J. Selec. Areas Commun., Vol. 18, No. 7, pp. 1169-1174, July, 2000], which can achieve full diversity order without the requirement to estimate the channel state at the receiver. This paper investigates the potential of using multiple receive antennas for differential space time coded MPSK signals over correlated Nakagami fading channels. We also investigate the effect of the carrier frequency offset (CFO) and channel correlation on its performance and present some results on its maximal tolerable frequency offsets for different MPSK signals. The results have shown that the differential encoding transmit diversity is very robust to the CFO and channel correlation.