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Multipath propagation is a fundamental requirement for the operation of multiple-input multiple-output (MIMO) wireless systems. However, at ultrahigh frequency (UHF) and above, pedestrian movement may significantly affect the multipath propagation conditions in indoor environments. For the first time, a systematic analysis of the effect of pedestrian movement on channel capacity for an otherwise line-of-sight MIMO link in a single room is presented. A novel channel model for the populated indoor environment is also introduced, based on geometrical optics and a detailed radar cross-section representation of the human body. The new model generates a temporal profile for the complex transfer function of each antenna combination in the MIMO system in the presence of specified pedestrian movement. Channel capacity values derived from this data are important in terms of understanding the limitations and possibilities for MIMO systems. Capacity results are presented for a 42-m2 single room environment, using a 2.45-GHz narrowband 8×8 MIMO array with 0.4λ element spacing. Although the model predicts significant increases in the peak channel capacity due to pedestrian movement, the improvement in mean capacity values was more modest. For the static empty room case, the channel capacity was 10.9 b/s/Hz, while the mean capacity under dynamic conditions was 12.3 b/s/Hz for four pedestrians, each moving at the same speed (0.5 m/s). The results presented suggest that practical MIMO systems must be sufficiently adaptive if they are to benefit from the capacity enhancement caused by pedestrian movement.