The next generation of wireless cellular systems will be data traffic driven, providing seamless connectivity to the Internet and its services. In the areas of information and communication technologies, cellular systems and the Internet have proven to be the most transformative technologies for society. This research endeavors to optimally marry these two technologies with the goal of dramatically increasing achievable data rates and coverage. The proposed solution is to deploy very small cellular access points in residential homes and offices. These ``femtocells" are connected to the network via existing DSL/Cable and do not require additional deployment of costly wired infrastructure. Several theoretical challenges are posed by the femtocell concept. In particular, due to lack of coordination with the rest of the network, femtocells interfere with the network itself. This research develops novel solutions for femtocell technology by exploiting ideas from cognitive radio, based on intelligent opportunistic usage of the shared radio resource. Femtocell base stations will be deployed without careful frequency planning and will react to the interference environment by adapting their signaling strategy, thus, in the vernacular of cognitive radio, the cellular system plays the role of the ?primary? user. Unlike the classical cognitive radio scenario, the cellular signaling protocols and coding schemes are known. In this research we build on recent results on the Gaussian interference channel and exploit the signal strength imbalances due to path-loss typical of cellular networks. Thus, the system is designed so that it operates predominantly in the regime of either weak or strong interference. Advanced signal processing and channel coding are exploited to utilize the fine structure of primary (cellular) signals, to explore the fundamental costs of cognitive radio and to develop coordination strategies to minimize this overhead. The goal of this novel design is to achieve a dramatic improvement in spatial reuse, allowing future cellular systems to achieve data rates comparable to wireless local area network while retaining the seamless connectivity and mobility of cellular networks.