In this paper, a composite Rayleigh-gamma distribution is proposed for the urban wireless channel environment which represents small-scale fading with no Line-of-Sight (LoS) and shadowing. Moment Generation Function (MGF) and truncated MGF for the proposed model are derived. Using these MGFs, the performance of digital communication systems is investigated in terms of channel capacity and bit error rate probability. Results show that the performance is adversely affected by the urban channel environment. Thus, an adaptive technique is proposed to enhance the system performance.