In this paper, a new multiple-input multiple-output transmission technique called quadrature spatial modulation (QSM) is proposed and analyzed in the presence of imperfect channel estimation at the receiver. In QSM, conventional spatial constellation diagram of spatial modulation (SM) system is expanded to include both in-phase and quadrature components. As such, significant enhancement in the overall spectral efficiency is achieved while retaining all inherent advantages of SM technique, such as inter-channel interference avoidance, single radio frequency chain transmitter and low receiver complexity. It is shown that significant performance enhancements can be achieved as compared with SM, Alamouti, and spatial multiplexing systems. Besides, the impact of Gaussian imperfect channel estimation on the performance of QSM system is studied. A closed-form expression for the pairwise error probability of generic QSM system is derived and used to calculate a tight upper bound of the average bit error probability over Rayleigh fading channels with perfect and imperfect channel knowledge. Also, simple asymptotic expression is derived and analyzed. Obtained Monte Carlo simulation results highlight the accuracy of the conducted analysis.