Cooperative wireless communication is a communication mechanism to attain diversity through virtual antenna array that is formed by sharing resources among different users. Different strategies of resource utilization such as amplify-and-forward (AF) and decode-and-forward (DF) already exist in cooperative networks. Although the implementation of these strategies is simple, their utilization of the channel state information (CSI) is generally poor. As a result, the outage and bit error rate (BER) performances need much more improvement in order to satisfy the upcoming high data rate demands. For that to happen the spectral efficiency supported by a wireless system at a very low outage probability should be increased. In this paper a new approach, based on the previously existing ones, called CSI directed estimate and forward (CDEF) with a reduced estimation domain is proposed. A closed form solution for the optimal signal estimation at the relay using minimum mean square error (MMSE) as well as a possible set reduction of the estimation domain is given. It will be shown that this new strategy attains better symbol error rate (SER) and outage performance than AF or DF when the source relay link is comparatively better than the relay destination link. Simulation results also show that it has got better spectral efficiency at low outage probability for a given signal to noise ratio (SNR) as well as for a fixed outage probability in any operating SNR range.