A complete theory for the analysis of narrowband binary FM with limiter-discriminator detection in a fast Rayleigh as well as a Rician fading channel is presented. Error rate results which are in close agreement with experimental measurements are obtained for both cases and compared against the nonfaded benchmark. The use of digital FM and other modulation schemes in a fading environment is also discussed in relation to the nonfaded benchmark. It is suggested that DQPSK with its high spectral efficiency is suitable for land-based cellular mobile communications while binary FM with limiter-discriminator detection is appropriate for satellite-based mobile radio systems.