This thesis describes the simulation of the proposed IEEE 802.11p Physical layer (PHY). A MATLAB simulation is carried out in order to analyze baseband processing of the transceiver. Orthogonal Frequency Division Multiplexing (OFDM) is applied in this project according to the IEEE 802.11p standard, which allows transmission data rates from 3 up to 27Mbps. Distinct modulation schemes, Binary Phase Shift Keying (BPSK), Quadrate Phase Shift Keying (QPSK) and Quadrature Amplitude modulation (QAM), are used according to differing data rates. These schemes are combined with time interleaving and a convolutional error correcting code. A guard interval is inserted at the beginning of the transmitted symbol in order to reduce the effect of Intersymbol Interference (ISI). The Viterbi decoder is used for decoding the received signal. Simulation results illustrate the Bit Error Rate (BER), Packet Error Rate (PER) for different channels. Different channel implementations are used for the simulations. In addition a ray-tracing based software tool for modelling time variant vehicular channels is integrated into SIMULINK. BER versus Signal to Noise Ratio (SNR) statistics are as the basic reference for the physical layer of the IEEE 802.11p standard for all vehicular wireless network simulations.