The present invention relates to a technique for achieving cross-polarization interference (CPI) cancellation with or without equalization in a digital-radio, space-diversity communication system. More particularly, a present receiver includes a pair of spaced-apart diversity antennas, where each antenna is capable of receiving orthogonally polarized signals, e.g., Vertical and Horizontal polarizations, from a remote transmitter. The received orthogonally polarized signals from each antenna are separated and coupled to separate inputs of a separate cross-polarization canceler, where each canceler includes two straight-through and two cross-over paths including a separate complex gain multiplier disposed in each path. The correspondingly orthogonally polarized output signals from each of the cancelers are added to produce a first and a second orthogonally polarized overall canceler arrangement output signal. Power measurements are taken of the two overall output signals during predetermined periods of time to produce control signals in a Control and Dither means for appropriately adjusting the complex gain multipliers in each canceler and substantially cancel CPI while providing equalization where desired. Additionally, control signals can also be generated for transmission back to the remote transmitter for appropriately adjusting a canceler therein when CPI cancellation including a second order in frequency is desired.