Multiple-Input, Multiple-Output (MIMO) describes systems that use more than one antenna element at each end of the wireless link. Combining two or more received signals on both the transmit and receive ends, has the most benefit of improving received signal strength, but MIMO also enables better performance in high data rate transmission. Many in the wireless communication world are hoping to utilize MIMO communications to boost capacities, expand bandwidths, increase signal-to-interference ratios, and mitigate fading.This paper investigates many factors that may affect the MIMO channel capacity when perfect channel state information (CSI) is assumed at the receiver, but not always at the transmitter. The results showed that the increase of Rician fading, K factor, antenna correlation, cross-polorization discrimination(XPD) may affect the ergodic and outage capacity of MIMO systems. MIMO was described, and the potential of 5 × 5 MIMO system in capacity degradation reduction was presented and simulated using Monte Carlo simulation. The simulation results obtained using MATLAB-2009 a were presented and discussed.