The target of this paper is to show the impact of polarization adaptation on the received signal quality in an outdoor small-cell deployment scenario. The signal-to-interference ratio (SIR) is the key factor in defining the achievable data rate, and the capacity of the cell. At the cell border area, the SIR value is typically low and causes a significant decrease in the system capacity and achievable data rates. These bad SIR areas at the cell border can be improved by using orthogonal polarizations in the neighboring cells rather than using all polarizations over the whole cell coverage area. For the research work of this paper, a series of measurements were carried out to measure a received signal power and a cross polarization discrimination (XPD) ratio while the signal is transmitted and received with a different set of polarizations. In the measurements, we have considered horizontal, vertical, +/− 45° slanted polarizations, and two different environments, urban street and open space, and three frequency bands, 970−1030 MHz, 2000−2030 MHz and 3364−3400 MHz. The measurement results revealed that at a different distance from the transmitter, for horizontal/vertical polarization, the average XPD is around 24.7 dB and 31.7 dB in the urban street and open area environments, respectively. For +/− 45° slanted polarization, the average XPD is around 11.5 dB and 12.1 dB in the urban street and open area environments, respectively. This paper goes on to propose polarization adaptation in each cell, where the primary polarization is valid for the whole service area of the cell, and secondary polarization is only used in close proximity of the base station antenna. Considering the results, it is emphasized that system capacity can be significantly improved by having only one channel with good SIR values compared to multiple channels with bad SIR values. However, MIMO channels with orthogonal polarizations or with spatial multiplexing can be utilized in the closed vicinity of the base station, i.e., in an area with good SIR values. It is shown that the overall cell capacity can be increased by almost 35% by utilizing polarization adaptation compared to MIMO 2 × 2.