It is shown that the nonlinear distortion caused by two-path propagation for the case of amplitude modulation is a result of overmodulation in the resultant signal. This distortion becomes severe only when the time delay on the secondary path is large and the amplitudes are nearly equal. In the case of an FM system, the instantaneous frequency of the resultant signal has sharp, spike-shaped variations which reach large amplitude when the signals are of nearly equal strength. It is shown that an averaging process occurs in the receiver tending to minimize distortion when the discriminator is so designed to as respond linearly to a very wide frequency deviation. Such distortion may be quite small when the transmitter frequency deviation is made large. When the discriminator range is too narrow, the distortion is increased, especially for wide-band systems. A discriminator range of several thousand kilocycles may be necessary to achieve optimum suppression of distortion.