Atmospheric turbulence causes fluctuations in both the intensity and phase of the received signal in an optical wireless communication link. These fluctuations, often referred to as scintillation noise, lead to signal fading, which increase bit errors in digital communication links using intensity modulation and direct detection. The performance of an optical link can be improved by the use of a time delayed diversity technique, which takes advantage of the fact that the atmospheric path from transmitter to receiver is statistically independent for time intervals beyond the correlation time of the intensity fluctuations. We have designed and constructed a prototype optical wireless system using this scheme. Bit-error-rate measurements have been used to characterize the link performance for different delay periods under conditions of controlled simulated turbulence. It has been determined that link performance improves significantly, especially in strong turbulence. In addition, we have implemented orthogonal polarization modulation, which works especially well in optical wireless systems. In contrast to fiber optic communications, the polarization state of a laser beam is well preserved on a free space optical path.© (2004) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.