AbstractThis paper proposes differential parallel combinatory spread spectrum (DPC/SS) communication systems; one of the parallel combinatory spread spectrum (SS) communication systems the authors have been studying so far. the parallel combinatory SS system is a spectral efficient SS system in which the system transforms sever al bits of data into a combination of pseudonoise (PN) sequence with modulation of positive and negative signs and transmits them.The proposed DPC/SS system applies differential encoding to the positive or negative sign modulation of the PN sequences, and then they are transmitted. In the receiver, the combination of a transmitted sequence set is estimated by noncoherent detection and the coded sign is demodulated by differential detection. Thus, the receiver does not need to regenerate the phase of the carrier frequency. the proposed systems will be applicable to a mobile cellular system in which a large phase variation interferes with the communications.This paper evaluates the error performances. of the DPC/SS systems in additive white Gaussian noise (AWGN) channels and frequency‐nonselective, slowly Rayleigh fading channels. It also evaluates the effect of diversity in the Rayleigh fading channels.In the AWGN channel, the DPC/SS system is superior by I dB to the differential phase‐shift keying (DPSK) system and to the BPSK system in terms of required signal‐to‐noise ratio at 10‐8 bit error rate (BER) at the same spectral efficiency. In the Rayleigh fading channel, diversity reception in the DPC/SS system gains more improvement in the BER performance, as the number of branches increases, than that obtained in a direct‐sequence spread spectrum system with DPSK.