Development of a coherent optical communication system using frequency stabilized solid state lasers for eventual deployment in space is being actively pursued at the Jet Propulsion Laboratory. A demonstration system transmitting at 1.06 μm with low to moderate data rates has been implemented. Both the transmitter and the local oscillator (LO) employ frequency stabilized (Δv ~ 5 kHz), diode pumped Nd:YAG monolithic ring lasers. Frequency tuning and phase locking are accomplished piezoelectrically with a response time <1 μs.1 Pulse position modulation of the transmitted beam is accomplished by an external GaAs acoustooptic modulator. At the receiver, the signal is mixed with the LO, detected, and processed to retrieve the data stream as well as the error signal for frequency tuning and phase locking of the LO laser. At low data rates, the small received signal energy (per laser coherence time) makes receiver phase and frequency tracking the limiting factor in system performance.</jats:p