A new era of wireless communications combats with many challenges, including the performance issues and the demand of higher data rate. Upcoming generations of wireless communications will bear the resemblance in terms of same issues. The main goal of engineers and developers is to advance the algorithms and techniques to provide a better quality of service (QoS) and also guarantee the higher data rates.This thesis investigates the performance of dual–hop amplify– and–forward (AF) relaying networks using cooperative diversity technique with co–channel interference at the relay. It is assumed that the relays operate in a limited interference environment over Rayleigh fading channels. The performance of the relaying network in terms of bit error rate (BER) depends on the number of relays between source and destination. However, the system insures better performance by using adaptive modulation in terms of spectral efficiency. The investigation is done in terms of signal–to–interference–noise– ratio (SINR), BER, outage probability and spectral efficiency. The relays are under the influence of non–identical independent distributed interferences. Channel state information at the sender end is instantaneous and partial, based on the best relay being selected for the communication.