Abstract: A distributed dynamic channel assighnment algorithm is proposed and its performance is examined in a highway microcellular radio environment. In the two-step odered local packing (TOLP) scheme, channels are assigned on an ordered basis under cochannel interference constraints. One-step and two-step reassignment are used to increase the channel utilization in congested microcell region. A selection criterion is employed to decide the cell from which a free channel is borrowed. Simulation results show that the proposed scheme outperforms existing methods in channel utilization and call blocking probabilities, especially under asymmetric call arrivals with a lower call switching requirement.