Enhancing system capacity while maintaining quality of service is an important issue in wireless cellular networks. In this paper, we present a localized channel sharing scheme to address this problem. Our basic idea is to allow channels to be shared between adjacent cells at the expense of a smaller initial allocation of channels per cell. We show that this tradeoff results in a better utilization of network resources. An important feature of our sharing scheme is that channel management is localized between adjacent cells, and no global coordination or optimization is required, thus making it suitable for implementation. The sharing scheme can also facilitate handoff processing. We provide numerical results comparing our scheme with the channel reservation technique, and find a significant performance improvement over a wide range of traffic parameters and a variety of quality of service requirements. I. INTRODUCTION Worldwide focus on wireless networking research has intensified i..