An assessment of spectrum efficiency for a microcellular land mobile radio system is presented by considering the desired signal as (fast) Rician fading with (slow) log-normal shadowing and co-channel interfering signals as uncorrelated (fast) Rayleigh fading superimposed over (slow) log-normal shadowing. Spectrum efficiency is defined in terms of reuse distance, i.e., cluster size, traffic intensity, bandwidth of the system, and area of a cell by considering co-channel interference probability. The expression for co-channel interference probability is derived using appropriate path-loss law for microcells for four different cases, viz.: i) Rician plus log-normal desired signal and Rayleigh plus log-normal interfering signals; ii) Rician desired signal and Rayleigh fading plus log-normal shadowing interfering signals; iii) Rician desired signal and Rayleigh interfering signals; and iv) both desired and interfering signals as Rician fading. Finally, the performance of a microcellular system is compared with that of a conventional macrocellular system.