Nonlinear underactuated systems (i.e. systems with fewer control inputs than configuration variables) present significant challenges for automatic control. This thesis explores feedback control of an underactuated hovercraft over a wireless communication channel using techniques from nonlinear control theory. A family of control laws stabilizing the hovercraft <em>reduced dynamics</em> - including zero velocity, constant forward/reverse velocity, and constant angular velocity stabilization - are derived. Lyapunov arguments are used to prove convergence of the reduced dynamics under the control laws. It is shown that heading cannot be stabilized by a continuously differentiable state feedback law. In response, two hybrid control algorithms for heading stabilization are proposed. The control laws are demonstrated on a real R/C hovercraft using a distributed autopilot and a Bluetooth network. A two-dimensional aided INS is developed using a MEMs IMU and the "Cricket" RF/ultrasonic ranging system. Experimental and simulated results from a high-fidelity model are shown to agree nicely.