A wireless local area network (LAN) system is proposed to provide mobility for existing data communication services. This thesis presents a physical layer design for a direct sequence spread spectrum ISM band radio LAN system. This radio system employs spread spectrum communication technology and a differential binary phase shift keying/quadrature phase shift keying (BPSK/QPSK) non-coherent receiver to overcome the adverse indoor wireless environment. Moreover, a variable data rate transmission technique is used to dynamically configure the spread spectrum system according to channel performance. This physical layer incorporates the Zilog Z2000 Evaluation Board performing direct sequence spread spectrum processing, a Grayson 900 MHz radio receiver and a transmitter module which was designed and built at Virginia Tech. The transmitted spectrum occupies a 4 MHz bandwidth in the 900 MHz ISM band and this system supports a data rate of up to 363 Kbits/sec. The spread spectrum system design along with detailed descriptions of hardware and control software development are presented.