LMDS networks are fixed radio systems providing advanced telecommunication services to a variety of users. Millimeter wave frequencies above 20 GHz have been allocated to LMDS systems by ITU-R and CEPT. The design of LMDS systems must take into account how interference affects performance considering the dominant propagation impairments in these frequencies. In the present paper, cell-site diversity, an effective fade mitigation countermeasure for LMDS systems, is considered for the reduction of intersystem interference on downstream LMDS channels. The intersystem cochannel interference may originate from adjacent LMDS networks or from point-to-point links operating at the same frequencies. A physical propagation model for the calculation of carrierto-interference ratio diversity gain for the downstream channel is presented. Numerical results focus on the impact of frequency of operation, the subscriber's service availability and the climatic conditions on the interference analysis of LMDS networks either using or not cell site diversity.