—In wireless relay networks, noise at the relays can be correlated possibly due to common interference or noise propagation from preceding hops. In this work we consider a parallel relay network with noise correlation. For the relay strategy of amplify-and-forward (AF), we determine the optimal rate maximizing relay gains when correlation knowledge is available at the relays. The effect of correlation on the performance of the relay networks is analyzed for the cases where full knowledge of correlation is available at the relays and when there is no knowledge about the correlation structure. Interestingly we find that, on the average, noise correlation is beneficial regardless of whether the relays know the noise covariance matrix or not. However, the knowledge of correlation can greatly improve the performance. Typically, the performance improvement from correlation knowledge increases with the relay power and the number of relays. With perfect correlation knowledge the system is ...