Many statistical distributions including Rayleigh, Rician, Nakagami-m, Hoyt, η-μ and κ-μ are proposed in literature to model fading in wireless Communication systems. This paper presents the study of MIMO system in a recently proposed Two Wave with Diffuse Power (TWDP) fading model, having two specular multipath components in the presence of diffusely propagating waves. It has been verified that the TWDP fading model is better suited to represent real world frequency selective fading on the basis of data collected from wireless sensor networks. This paper studies the performance of MIMO system in TWDP fading scenario. Upper and lower bounds of the capacity for MIMO system have been derived in TWDP fading scenario.