Relay networks have received considerable attention recently, especially when limited size and power resources impose constraints on the number of antennas at each node. While fixed and mobile relays can co-operate to improve reception at the desired destination, they also contribute to un-intended interference for neighboring cells reusing the same frequency. In this paper, we propose and analyze a relay scheme to simultaneously maximize SNR and minimize MSE, for an amplify-and-forward (AF) relay network operating under a receive power constraint guaranteeing that the received signal power is bounded to control interference to neighboring cells. If the intended destination lies at the periphery of the cell, then the proposed scheme guarantees that the total power leaking into neighboring cells is bounded. The optimal relay factors are provided for both correlated and uncorrelated noise at the relays. Simulation results are presented to verify the analysis. © 2009 IEEE.