In this paper, a refined analytic model is presented for the IEEE 802.11 distributed coordination function (DCF) in a time-varying channel environment. In the proposed model, the channel is modelled using a finite-state Markov (FSM) chain. The saturation throughput and average packet delay are analyzed from the proposed model. It is shown using OPNETTM and UltraSANTM simulations that the proposed model accurately predicts the performance of the IEEE 802.11 DCF.