In this paper, we study two-way satellite relaying between two earth stations (ESs) willing to exchange their signals via a satellite. The satellite communication has big problems of propagation delay and fast channel gain fluctuations, due to which it is difficult to generate perfect channel information in ESs for self interference cancellation and decoding of transmitted symbols. Therefore, the usual two-way relaying developed for the terrestrial links is not applicable for the satellite links. In order to avoid the problem of channel estimation, we propose to use differential modulation in both ESs. Then we develop a differential detector of the symbols transmitted by the ESs. The satellite is assumed to be of transparent type. The proposed differential decoder allows for self interference cancellation and detection of the transmitted symbols without any channel information. However, the proposed differential detector requires a relative rotation between the constellations of both ESs for performing satisfactorily. The proposed two-way relaying is useful for the satellite communication systems as it allows the ESs to exchange their data via satellite without any training. The pairwise error probability (PEP) of the proposed scheme is also derived. Based on the PEP, we analytically find the diversity of the considered system. Index Terms-Amplify-and-forward (AF) protocol, differential modulation, land mobile satellite (LMS) links, M-ary phase shift keying (M-PSK), satellite communications, Shadowed-Rician (SR) distribution, two-way relaying.