Wireless optical communication systems have the potential of establishing secure high data rate communication links. In order to realize the ultimate promise of these links, channel modeling and communication algorithms must be developed. This thesis addresses free-space optical (FSO) system design and provides novel contributions in four major areas: (1) channel modeling, (2) channel capacity and optimal signal design, (3) signaling algorithms, and (4) formal methods to jointly design code rate and beamwidth for FSO systems.;A novel statistical channel model taking into account atmospheric and misalignment fading is developed that generalizes the existing models and accounts for transmitter beamwidth. The channel capacity is analyzed under average and peak optical power constraints and a new class of non-uniform discrete input distributions are developed with mutual information that closely approaches the channel capacity. Algorithms to realize the proposed non-uniform signaling and achieve the promising rates are also presented. Numerical simulations are conducted with finite length low density parity check codes showing significant improvement in system performance. Finally, the developed signaling is applied to FSO channels considering the above impairments. Beamwidth optimization is considered to maximize the channel capacity subject to outage. It is shown that a rate gain of 80% can be achieved with beamwidth optimization.
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