Channel allocation problem is one of the most important issues in mobile computing networks. The purpose of this thesis is to develop a new distributed dynamic channel allocation algorithm. The proposed algorithm attempts to reuse channels in different cells to optimize the channel usage. It also assigns a large number of channels to the heavily loaded cells, and a few channels to the lightly loaded cells according to the traffic patterns of mobile computing network in real time. Co-channel interference is prevented in this algorithm. Moreover, the proposed algorithm is deadlock-free, interference-free, and achieves that maximum channel utilization