The continuous advancement in wireless communications technology demands new approaches to improving the capacity of existing radio links. The high data throughput required can be achieved by the complete utilization of space, time and polarization diversities inherent in any propagation environment. Among the different propagation scenarios, the indoor channels represent a particularly challenging problem given the number and complexity of interactions between the transmitted signal and the environment. This dissertation explores the interrelation between propagation physics and space-time-polarization diversity based on a novel high resolution channel sounding and reconstruction technique. First, a method to reconstruct the indoor complex channel response based on a limited set of samples and the elimination of the interference using deconvolution techniques is presented. Then, the results for the joint angle-of-arrival, delay characterization and depolarization of electromagnetic waves are presented. Finally, a novel approach to using depolarized multipath signals to boost the receiver signal-to-noise performance is presented. The current study shows that full utilization of the diversities of channel novel wireless systems can be proposed with significant improvement in capacity.