I am using the UART of ATmega16 for transmission. It is connected to XBee using a development kit which already has a MAX232 IC. How can I use the UART of ATmega16 with XBee? The other XBee is connected to PC.
If there is a MAX232 on the XBee development kit, you need to add a level converter to the micro UART as well. If there is a way to bypass the MAX232 and connect to the XBee at the micro voltage levels, you could connect the micro Tx to the XBee Rx (and vice-versa) directly.
If you don't want to wire up the MAX232 (and externals) yourself, you can use a converter board, such as this one from Sparkfun: