Capacity estimation in code division multiple access (CDMA) systems is an important issue. It is very much related to the way by which the power is controlled to the system. Power control, in fact, is responsible of maintaining the received power at a desired level regardless of changes in the number of active users or in the amount of total other interference. However, signal-to-interference ratio (SIR) based power control systems maintain the received SIR at a desired level as a function of the number of active users as well as the amount of total other interference. Several studies have derived the reverse link capacity of an SR-based power control system supporting ON-OFF traffic in multiple cell environments taking into account the effects of the activity factor, the required bit energy to interference level (EL), and the maximum received power. However, only binary modulation was considered. For the third generation mobile systems, adaptive modulation and coding will be used to optimise system performance. This thesis extends the result of [7] in which the probability of outage was obtained for an SIR-based power control system implementing BPSK modulation to coded, M-ary modulation in which the reverse link capacity of different M-ary systems, based on the Outage equation, is obtained for the SIR-based power control system in a multiple cell environment supporting CBR traffic and ON-OFF traffic. ary Phase Shift Keying (MPSK), and M-ary Quadrature Amplitude Modulation (M-QAM) are considered. Outage analysis is presented for coded M-ary modulation schemes, and BCH coding is also investigated to optimise system capacities for Rayleigh faded and Gaussian channels. The results show that SIR-based power control system resulted in higher capacity for all M-ary modulation schemes compared to systems implementing Strength-based power control system. Moreover, even without the use of error correcting codes, the signal alphabets corresponding to M=4, 8, 16, 32, 64 outperform binary modulation. The capacities obtained for the different M-ary modulation clearly show that for M=16, the system capacity is the highest (MQAM signal constellation is considered since it offers an increase in the processing gain (PG) by a factor of logz(M. ( Finally, system capacity is found as a function of modulation level (M) and coding rater) and can be enhanced greatly by choosing the right combination of Mand r.