— Multiuser diversity is a phenomenon caused by channel variations among different users in a wireless network. Cooperative relaying provides another form of diversity due to the spatial separation of sensors. In this work we show how the simultaneous application of these two sources of diversity in a decentralized manner can lead to significant throughput improvement in sensor networks. To exploit this synergy we propose a family of protocols termed Channel Aware Aloha with Cooperation (CAAC). Different power allocation schemes for CAAC are considered, including Constant Power, Fixed Rate, and Optimal Variable Rate. In each case we derive the scaling behavior of the achievable rate. We find the optimal source and relay transmission strategies under each scheme and show that the overall system performance is significantly improved. Furthermore, we show that the Constant Power scheme is asymptotically optimal, allowing easy implementation in simple sensors.