Abstract: This paper studies the fractal characteristics of multipath fading channels and proposes a novel algorithm for the channel estimation, which is basically an MMSE estimation algorithm modified by employing fractal dimension and wavelet reconstruction analyses. The algorithm can improve the estimation accuracy of multipath fading channel parameters and avoid the error propagation problem of conventional approaches. Simulation results show that the new algorithm can estimate the channel parameters more accurately compared to the MMSE method, and significantly improve the receiver bit error rate (BER) in the fast fading environment.