An exact expression of the average error rate is developed for a band-limited binary phase-shift keying (BPSK) system in the presence of adjacent channel interference (ACI) considering a Nakagami fading channel. The system employs a root-raised cosine (RRC) filter both in the transmitter and receiver sides and a transmitter power amplifier (PA) that may have nonlinear input/output characteristics. These practical considerations are accurately taken into account. By utilizing the characteristic function (CF) method of error-rate analysis, we interestingly blend the concepts of time and frequency domains and develop an error-rate expression that is simple and general for several system parameters, including adjacent channel separation, RRC filter roll-off factor, and PA output back-off (OBO). Hence, the error rate in the presence of cochannel interference (CCI) is obtained as a special case. The developed results for a single-branch receiver are then extended for diversity receivers, and several interesting observations are made.