Monte Carlo simulations are used to study the role of the dipolar inte
raction in determining the properties of a monolayer of magnetic dipol
es on a square lattice. The dipoles are constrained to lie in the plan
e but are free to rotate within it. Comparison of the Monte Carlo resu
lts with those from spin-wave theory indicate that the system orders b
elow a nonzero critical temperature. The effect of the thermally induc
ed anisotropy on the spin-wave spectrum and its role in stabilizing th
e ordered phase at low temperatures is discussed. Results for the corr
elation function. both above and below the transition temperature, are
compared with the corresponding results for the standard XY model.