Relaying is a promising technique to extend coverage and improve throughput in wireless networks, but its performance is degraded in the presence of co-channel interference. In this paper, we consider coordinated relay beamforming to suppress interference and improve the date rates of two-hop interference networks. We first propose optimal coordinated relay beamforming algorithms to characterize the achievable rate region and maximize the sum-rate. By imposing a constraint on the desired signals, a low-complexity iterative algorithm is then proposed to maximize the sum-rate. Through performance comparison, we show that the proposed relaying strategy provides a promising tradeoff between complexity and performance. To further reduce design complexity, we propose a new interference management scheme, interference neutralization, to cancel the interferences over the air at the second hop. We show that this scheme yields a closed-form solution for the beamforming design and provides good performance especially at high signal-to-noise ratio (SNR). © 2012 IEEE.