In this paper, outage probability analysis of spatial modulation with capacity optimized antenna selection is studied in Nakagami-m fading channel model. At first, we obtain probability density function of received signal-to-noise ratio for Nakagami-m channel. By use of the PDF, the performance of the system is evaluated in terms of outage probability. It is shown that the system performance is improved when fading severity m increases. Also, all the analytical results are verified by the computer simulations.