We design a dynamic channel assignment algorithm for IEEE 802.11 wireless networks. Our algorithm assigns channels dynamically in a way that minimizes channel interference generated by neighboring access points (APs) on a reference access point, resulting in higher throughput. We implement and simulate our algorithm using two versions (I: pick rand and II: pick first) and different number of APs (4, 9, 16, and 25). Analysis of our algorithm shows an improvement by a factor of 4 (by lowering the total interference on an AP by 6 dBm on average) over default settings of having all APs use the same channel. As the number of APs is increased in a given service area, dynamic channel assignment becomes crucial; otherwise overlapping channel interference becomes a limiting factor.