Abstract: This paper investigates a spatial multiplexing MIMO scheme with beamforming and space-time block coding (STBC) for downlink transmission. It combines SM-STBC with beamforming under high spatial correlated channel, and has the advantages of the three techniques. The proposed scheme utilizes beamforming weights to build uncorrelated virtual channels based on uplink direction of arrival (DOA) estimation, and we calculate weights with the help of the water-filling power allocation. The Butler fixed beamforming network is deployed to receive parallel data streams due to its ability to form orthogonal beams. We also propose a matching algorithm linking each data stream to corresponding receive beam, and give the order of successive interference cancellation detection. So the system can transmit parallel data streams as well as providing beamforming and diversity gain. Simulation results show the proposed scheme has a better performance than the benchmark systems under the same spectrum efficiency, and it is suitable for the rich scattering environment.