Digital Enhanced Cordless Telecommunication (DECT) can be a latent solution for wireless local loop (WLL) based communication system planning. However DECT performs poorly in multipath propagation scenarios. To overcome the difficulties and utilize the advantages of DECT systems, smart antennas can be introduced. In this paper, the design and simulation of a smart antenna system for DECT radio base stations in WLL is presented. A 8 × 8 planar microstrip antenna array is designed and associated signal processing techniques for one and two dimensional cases of smart antenna systems are analyzed. Two different algorithms are used for Direction-of-arrival (DOA) estimation using the 8 × 8 array parameters, these are MUltiple SIgnal Classification (MUSIC) and Estimation of Signal Parameters via Rotational Invariance Techniques (ESPRIT). Simulation results and performance comparison of these two algorithms for optimum output are incorporated. For adaptive beamforming, Least Mean Square (LMS) algorithm is used here. Radiation characteristics, gain and return loss of the fixed beam planar array antenna are simulated using Zeland IE3D software. Signal processing simulations are run in MATLAB. This smart antenna system is designed for DECT system in 1.88-1.90GHz frequency band. © 2010 ACADEMY PUBLISHER.