We will give a short overview about the operating principles and applications of smart antennas in mobile communications. Smart antennas adaptively process signals from several antenna elements in order to exploit the spatial dimension of the channel. This can be done either by beamforming, or by exploiting a diversity effect. By either of those methods, it is possible to improve transmission quality and capacity in both TDMA and CDMA systems. These benefits are even more pronounced if adaptive antennas are used at both the transmitter and the receiver.