A generalized quadrature-quadrature phase shift keying (Q/sup 2/PSK) signaling format is considered for differential encoding and differential detection. Performance in the presence of additive white Gaussian noise (AWGN) is analyzed. Symbol error rate is found to be approximately twice the symbol error rate in a quaternary DPSK system operating at the same E/sub b//N/sub 0/. However, the bandwidth efficiency of differential Q/sup 2/PSK is substantially higher than that of quaternary DPSK. In differential detection, it is quite reasonable to suspect that errors tend to occur in pairs. It is shown that when the error is due to AWGN, the ratio of double error rate to single error rate can be very high, and the ratio may approach zero at high signal-to-noise ratio. In an attempt to improve the error rate performance, differential detection through maximum-likelihood decoding based on multiple or N symbol observations is considered. >