We propose a multiple input multiple output (MIMO) radar system with widely separated antennas that employs monopulse processing at each of the receivers. We use Capon beamforming to generate the two beams required for the monopulse processing. We also propose an algorithm for tracking a moving target using this system. This algorithm is simple and practical to implement. It efficiently combines the information present in the local estimates of the receivers. Since most modern tracking radars already use monopulse processing at the receiver, the proposed system does not need much additional hardware to be put to use. We simulated a realistic radar-target scenario to demonstrate that the spatial diversity offered by the use of multiple widely separated antennas gives significant improvement in performance when compared with conventional single input single output (SISO) monopulse radar systems. We also show that the proposed algorithm keeps track of rapidly maneuvering airborne and ground targets under hostile conditions like jamming.