This paper studies the differentially amplitude and phase-encoded (DAPE) quadrature amplitude modulation (QAM) transmission over correlated Rayleigh channels with diversity reception, Operating over two successive received symbols, the optimum and an asymptotic maximum-likelihood (AML) differentially coherent receivers are developed and compared with a conventional switched diversity combining (SDC) grid receiver, It is shown that the AML and SDC grid receivers are much simpler in complexity than the optimum receiver in that no channel side information is required in their realization, An exact expression of the bit-error probability (BEP) is obtained for the SDC grid receiver, Based on a union bound argument, a BEP upper bound for the AML receiver is also derived and verified by simulation, Numerical results on 16- and 64-point constellations show that the AML receiver exhibits almost the optimum performance and the SDC grid receiver with a small level of diversity is nearly optimum. It is also shown by simulation that the conventional equal-gain diversity receiver performs almost optimumly for demodulating a 16-point DAPE QAM signal.