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It is well-known that array calibration is an indispensable procedure to achieve the theoretical high performance for smart antennas. The paper analyses the effect of mutual coupling between elements on direction-of-arrival (DOA) estimation and presents a novel calibration method for circular smart antenna arrays. The proposed method uses the subspace principle to estimate the coupling coefficients with larger amplitudes, provided that the other coefficients can be yielded from the measured data as a prior knowledge. Then mutual coupling effect can be eliminated with the simple matrix compensation technique. Computer simulation results demonstrate the effectiveness and behavior of the proposed method.