In land mobile communication, very extensive studies on pilot symbol assisted modulation (PSAM) have been made on fading compensation. This paper analyzes the effect of power amplifier nonlinearity on PSA-QAM with maximal ratio combining space diversity. In practical PSAM, information on fading is obtained through interpolation of the pilot symbols. We employed the interpolation filter which could minimize the average power of error and analyzed effects on the system performance of the number of filter taps, period of the pilot symbol frame, and the Doppler frequency. Nonlinear power amplifiers of class AB, B, and C were incorporated in the system models and their AM/AM and AM/PM characteristics were taken into account in the performance analysis. We showed the performance variations according to the types of the nonlinear power amplifiers in the AWGN and Rayleigh fading channels using nonlinear compensation technique, Cartesian Feedback Loop (CFB).