In this paper, we derive the optimal sequence estimator for digital signals received over LAMBDA different channels. Each of these channels corrupts the transmitted signal by a mixture of additive white Gaussian noise (AWGN) and frequency-nonselective, correlated,1 fast2 Rician fading. By analysis we show that for the lth (1 less-than-or-equal-to l less-than-or-equal-to LAMBDA) diversity channel, the basic hardware structure of the optimal receiver consists of a combination of envelope, multiple differential,3 and coherent4 detectors. This is the same receiver structure recently derived by the authors for the same channel conditions, but with a nondiversity receiver.5 Nevertheless, the metric expression of the optimal sequence estimator required to decode the received digital signals is different and depends upon the number of diversity branches, the ratio of the fading-to-Gaussian noise powers, and the transmitted sequence. In order to reduce the overall implementation complexity, we also have proposed and evaluated suboptimal, e.g., having a small number of differential detectors and equal combining diversity structures, versions of the optimal receivers. Two modulation schemes were chosen in order to evaluate the overall performance of the proposed reduced-complexity diversity receivers; namely, the pi/4-shift 8-DQAM (differential qaudrature amplitude modulation) and the well-known 8-DPSK (differential phase shift keying). The obtained bit-error-rate (BER) performance evaluation results clearly indicated significant performance improvements, including substantial error-floor reduction, as compared to conventional differentially detected pi/4-shift differential quadrature phase shift keying (DQPSK) systems. Most of the improvements are obtained using diversity of order two (LAMBDA = 2). By means of computer simulation, the effect of correlation between the fading processes on the LAMBDA diversity channels was also investigated. It was found that the performance improvement obtained when using diversity greatly offsets the degradation caused by any practical level of correlation between diversity channels. BER performance results further demonstrated that the sequence estimation algorithm proposed is quite insensitive to significantly varying channel conditions, i.e., variations in the fading model spectral shape and parameters. This important quality renders it particularly suitable when considering a practical system implementation.