We consider a specific interference-limited wireless relay system that comprises several cooperation units (CUs) which are defined as a source and destination node pair with an associated relay node. In the wireless relay system, all source nodes simultaneously transmit their own signals and the relay node in each CU then forwards the received signal to the destination node, causing co-channel interference at both the relay node and the destination node in each CU. The co-channel interference at the relay node is closely related to that at the destination node in each CU. We first derive the end-to-end outage probability in a CU over Rayleigh slow-fading channels with interference for the decode-and-forward (DF) relaying strategy. Then, on the assumption that each CU is allocated with equal power we design an optimal power allocation between the source node and the relay node in each CU to minimize the outage probability of the investigated CU. At last, in the case that each CU is not allocated with equal power and the sum of their power is constrained, we present an optimal power allocation between CUs to minimize the sum of the outage probability of all CUs. The analytical results are verified by simulations.