In this letter, we analyze symbol error probability (SEP) and diversity gain of orthogonal space-time block codes (OSTBCs) in spatially correlated Rician fading channel. We derive the moment generating function (MGF) of an effective signal-to-noise ratio (SNR) at the receiver and use it to derive the SEP for M-PSK modulation. We use this result to show that the diversity gain is achieved by the product of the rank of the transmit and receive correlation matrix, and the loss in array gain is quantified as a function of the spatial correlation and the line of sight (LOS) component.