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The combination of space-time coding (STC) and smart antenna technology promises an enhanced performance in terms of power and spectral efficiency. However, with STC transmit diversity, each co-channel interferer (CCI) will produce more than one interference signal that appears independent to the smart antenna receiver, thus reducing the interference's suppression ability. Furthermore, when combined with STC, the conventional smart antenna should be redesigned to form multibeams toward the same desired user. In this paper, we propose an effective smart antenna system that can mitigate CCI while taking into account the STC transmit diversity. The performance of the proposed approach is evaluated in term of bit error rate and array pattern for flat fading channels as well as for frequency selective channels.