A hierarchical QAM system allows the transmission of different sources by embedding the relative constellation points. A QAM transmitting system, includes a source of a level 1 and a level 2 data stream, each data stream carrying successive symbols. A hierarchical QAM transmitter, coupled to the level 1 and level 2 data stream source, generates a hierarchical QAM signal in which a level 1 symbol is represented by a data point in one of four quadrants in the I-Q plane, and a level 2 symbol is represented by the data point in one of four sub-quadrants surrounding a center point of the quadrant containing the level 1 data point. The level 2 data point is spaced away from the center point by a grouping factor set to more closely match the bit error rate performance of the level 1 and level 2 data streams.