We propose a new multiple-input, multiple-output (MIMO) radar system with colocated antennas that can greatly reduce target fluctuations. This is achieved by employing frequency diversity. The proposed MIMO radar system results in a radar array with frequency-division multiplexing that can also incorporate beamforming to design the transmission beam pattern. After presenting an overview of existing MIMO radar systems and their related signal models, we provide a detailed description of the proposed frequency diversity technique and the corresponding transmitter and receiver structures. Furthermore, we present a maximum likelihood estimation algorithm that incorporates frequency diversity with MIMO radar, derive the corresponding Cramér-Rao lower bound, and demonstrate its improved performance using numerical results.