Software Defined Radio (SDR) is a hot topic of wireless communication research in recent years. The idea of SDR is to use ultra-high speed sampling and ADC/DAC modules directly measure the received radio signal and decode whatever it contains. The aim of this project is to study and understand SDR using MATLAB in audio frequency band. In this project, both analog and digital modulation and demodulation methods are studied. Two Matlab sessions are set for sender and receiver respectively in Windows 7. A simulation of signal modulation and demodulation can be presented clearly just with Matlab.