An X-Band eight-subarray smart antenna system has been developed in this article to demonstrate its capability of direction of arrival estimation for correlated arriving signals. The antenna array is composed of an eight-subarray antenna and eight-track of transceiver for quadrature baseband to RF up/down conversion. Multiple classification of signal (MUSIC) and modified MUSIC algorithm with spatial smoothing are used for high resolution angle of arrival (AoA) estimation. Measured results showed that the modified MUSIC algorithm with spatial smoothing is capable of estimating target AoA with average angle error of 1.14 when target arriving angles are varying from -30 to 30. Accurate results of AoA estimation by simulation and measurement for stationary or dynamic targets has also been demonstrated to validate the feasibility of the proposed X-Band smart antenna system.