An apparatus and method are provided for precoding by limited cooperation in a wireless communication system. A method of data precoding by a Base Station (BS) in a wireless communication system includes determining a Channel Quality Indicator (CQI) parameter indicating channel size information between the BS and a User Equipment (UE) served by the BS; transmitting the determined CQI parameter through a backhaul to a central unit; receiving, from the central unit, a weight factor based on a CQI parameter from each cell; and determining a precoding vector based on the weight factor. The weight factor represents a relative ratio of an inter-cell environment that is to be interfered by the BS.