In this paper, performance of Multiuser Multiple-Input Multiple-Output (MU-MIMO) uplink wireless communication is investigated in the presence of rayleigh fading. Information are modulated using QPSK or 16 QAM or 64 QAM modulator and modulated data are further encoded using STBC and then split into n streams which are simultaneously transmitted through M T transmit antennas of each user. Space Time Block Coding (STBC) is used for encoding the information at user's handset because the channel from handset to base station is bad-state channel and STBC is more suitable for bad-state channel to obtain low BER. Capacity is analyzed and simulated to show the performance of the proposed system. Simulation results obtained show that there is around 6 to 11 bits/s/Hz improvement in capacity at 10 dB for increasing number of users from two to four, and there is around 6 to 8 bits/s/Hz improvement in capacity at 10 dB for increasing number of users from single to two. BER Performance is also simulated and it is shown that performance declines around 10 to 11 dB and 2.5 to 3 dB for increasing number of users from single to two and two to four respectively at .