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In this paper, we provide a saturation throughput analysis of the IEEE 802.11 protocol at the data link layer by including the impact of both transmission channel and capture effects in Rayleigh fading environment. Impacts of both non-ideal channel and capture effects, specially in an environment of high interference, become important in terms of the actual observed throughput. As far as the 4-way handshaking mechanism is concerned, we extend the multi-dimensional Markovian state transition model characterizing the behavior at the MAC layer by including transmission states that account for packet transmission failures due to errors caused by propagation through the channel. This way, any channel model characterizing the physical transmission medium can be accommodated, including AWGN and fading channels. We also extend the Markov model in order to consider the behavior of the contention window when employing the basic 2-way handshaking mechanism. Under the usual assumptions regarding the traffic generated per node and independence of packet collisions, we solve for the stationary probabilities of the Markov chain and develop expressions for the saturation throughput as a function of the number of terminals, packet sizes, raw channel error rates, capture probability, and other key system parameters. The theoretical derivations are then compared to simulation results confirming the effectiveness of the proposed models.