Local Multipoint Distribution Service (LMDS) is a new wireless terrestrial fixed radio technology for broadband communication applicable that can be used to provide digital two-way voice, data, internet, and video services or other digital services requiring high capacity traffic channels. LMDS is operating at frequencies above 20 GHz, and the most serious impairment at these frequencies is rain fading. In the system point of view a moving rain cell over the LMDS service area will not only attenuate the desired signal but also the interferer. Many techniques could be used to overcome rain fading. Applying site diversity as a possible solution to reduce the effect of rain is necessary, because a rain-cell degrades the system performance at a part of the service area but the rain can improve the carrier signal conditions elsewhere depending on the locations of the base station, terminal station and the rain-cell. The site diversity technique has high ability to improve the performance level of all LMDS service area specially under rainy conditions.