This paper investigates the performance of IEEE 802.11p wireless access in vehicular environments (WAVE) system in small-scale fading models reported by Georgia Institute of Technology (Georgia Tech). We redesign the small-scale fading models to be applied to the computer simulation and develop the IEEE 802.11p WAVE physical layer simulator to provide the bit error rate and packet error rate performances. Moreover, a new channel estimator using decision directed channel estimation and linear minimum mean square error smoothing is proposed in order to improve the performance of the conventional least square channel estimator using two identical long training symbols. The simulation results are satisfactorily coincident with the scenarios of Georgia Tech report, and the proposed channel estimator significantly outperforms the conventional channel estimator.