Software Defined Radio is known as an evolutionary technology for wireless radio communications. In general, the advantages of using SDR systems, namely; lower cost and development time, fast system upgrade and interoperability are very promising and many manufacturers are adapting SDR systems as the ultimate solution for implementing communication systems. The purpose of current research is to combine the processing power of a computer and its ease of use, with a proper hardware for transmitting and receiving radio signals, in order to implement a digital communication system. It is strongly believed that GSM is one of the most popular wireless communication systems with an open standard. As a consequence, the GSM BTS has been chosen to be implemented in this project. The hardware used is capable of down converting GSM signals from 900MHz frequency range and transmitting them to the host computer. In the meantime, it can up convert the baseband signals received from computer to the appropriate RF band. On the other hand, all of the baseband signal processing functions and control procedures are performed on the host computer using high level computer programming languages leading to a software defined system. In this architecture, it is possible to provide various services defined in the GSM standard by running suitable software on the host computer. The standard GSM system employs control centers such as BSC and MSC which are responsible for controlling the radio in the BTS and switching the calls between users. In this project the BTS is controlled locally by the host computer running the BTS software. Call switching is carried out by means of a VoIP server that runs on the same computer. The result would be a BTS for the GSM standard using which GSM handsets would be able to call other handsets connected to the BTS and VoIP users connected to the VoIP server and also PSTN users. Such system can be used as a local GSM system or it may function as a standard micro-BTS by addition of the required standard interfaces. Keywords: 1-SDR 2-BT 3-Implementation 4-GSM