High data rate acoustic telemetry for underwater communications is limited by both the available bandwidth imposed by high frequency absorption and the range and Doppler spreading of the underwater channel. These limitations can be combatted by the use of spread channel communication techniques. Application of these techniques, however, has been limited by the space and power limitations required to implement the appropriate coding, waveform synthesis and modulation that are encountered in underwater environments. The availability of microprocessors and low power LSI circuits has changed the situation significantly so that now an extensive amount of signal processing can be packaged on remote underwater vehicles and sensors. During the last two years, M.I.T. and W.H.O.I. have jointly developed a digital acoustic telemetry system, DATS. The DATS system has been developed to characterize and test the data transmission properties of underwater channels using the capabilities made available by advances in solid state technology. The design of the DATS and its use is described in the paper.