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In this paper, we propose an optimal strategy for the transmission of scalable video over packet-based multiple-input multiple-output (MIMO) systems. The scalable extension of H.264/AVC that provides a combined temporal, quality and spatial scalability is used. For given channel conditions, we develop a method for the estimation of the distortion of the received video and propose different error concealment schemes. We show the accuracy of our distortion estimation algorithm in comparison with simulated wireless video transmission with packet errors. In the proposed MIMO system, we employ orthogonal space-time block codes (O-STBC) that guarantee independent transmission of different symbols within the block code. In the proposed constrained bandwidth allocation framework, we use the estimated end-to-end decoder distortion to optimally select the application layer parameters, i.e., quantization parameter (QP) and group of pictures (GOP) size, and physical layer parameters, i.e., rate-compatible turbo (RCPT) code rate and symbol constellation. Results show the substantial performance gain by using different symbol constellations across the scalable layers as compared to a fixed constellation.