IEEE 802.11b wireless networks and Bluetooth networks provide complimentary services using the same unlicensed radio frequency band. As the benefits of utilizing these services become increasingly apparent, the likelihood of mutual interference also increases. The wellknown frequency hopping algorithm and adaptive frequency hopping algorithm do not fully consider the interference level of the operating environment. In this paper an algorithm called interference-aware adaptive frequency hopping (IAFH) is presented and implemented on Bluetooth devices to mitigate the interference between IEEE 802.11b and Bluetooth wireless networks. An analytical model of IAFH is developed to evaluate the performance of 802.11b stations and Bluetooth devices in a mutual interference environment. The analysis comprises the collision probability, packet error rate, and throughput performance for both IEEE 802.11b and Bluetooth wireless networks. Simulation results confirm that 802.11b station and IAFHenabl...