Problem statement: Multiple Input and Multiple Output (MIMO) system with Multihop relaying techhnique is significant and active areas of wireless communication. In a rich scattering environment MIMO antenna system provides better channel capacity and data rates than single antenna systems. To provide high throughput, reliable transmission and broad coverage, wireless relaying techniques are essential in a variety of applications. In a cellular environment a relay can be used to overcome shadowing effect due to obstacles and multihop relaying can improve the throughput for mobiles suffering from poor signal to interference, noise ratio at the edge of a cell and reduce cell size to increase spectral efficiency. Approach: This study analyzes average mutual information of the Ricean channel for single hop Multiple Input Multiple Output (MIMO) system for different antenna configuation and dependence of capacity on the Rice factor for cellular system. The asymptotic capacity of multiuser two-hop MIMO system with Regularization Block Diagonalization (RBD) precoding techniques for Indepenent Identically Distributed (IID) channal and realistic Mobile to Mobile fading channel model was examined. In this realistic model, Non-Line-Sight (NLOS) propagation conditions are assumed from source mobile station to mobile relay and also from mobile relay to destination station. A non regenerative Amplify and Forward (AF) relay is used to optimize the capacity between the source and destination and also the evaluation was made for multiuser multihop relay system with correlated fading channel model using RBD precoding matrix. Results: The simulation results for average mutual information of single hop MIMO relay system for different antenna configuration with ricean channel model, ergodic sum mutual information for two hop relay system with RBD precoding technique and mutual information results for multiuser multihop relay system with correlated channel model was presented. Conclusion/Recommendations: Cellular systems generally operated at a fairly low SINR which can be increased on each hop by adding relays. Multiuser two hop relay system with RBD precoding for realistic mobile to mobile fading channel model is simulated and compared with IID channel model. Multiuser Multi-hop relay with optimal precoding and RBD precoding technique results were analyzed for correlated fading channel and found that capacity offered by RBD precoding scheme is better than other relaying systems.