Traditional antenna selection applied to MIMO systems ignores the presence of unselected (or inactive) antennas. However, compact arrays offer a unique advantage in that mutual coupling can be exploited to improve the system performance. Previous studies on selection with coupling have not considered the effects of the inactive-antenna terminations and lack detailed transceiver modeling. In this work, we present a communication-theoretic analysis and design of antenna selection systems for compact transceivers. We also propose a simple parasitic antenna selection technique that can significantly outperform traditional selection when coupling is present.