Pico-Cellular architecture fully reuses frequency to increase network capacity. However, it will increase the occurance of Handoff due to the small range of cell. Previous works in channel allocations can reduce blocking probability of handoff call, but it may increase blocking probability of new call. As a result, channel utilization is decreased because they can not adapt to network changes. In this thesis, we present a Dynamic Channel Allocation Mechanism with priority support. All channels and calls are divided into high and low priority. If there is no high_priority channel for high_priority call, high_priority call may downgrade its priority by sacrificing some QoS to utilize low_priority channels. We define two new array for network information status, one is next_cell state, and the other is the transition probability. Next_cell state is used to save prior M Cell_Ids where handoff calls may move to. Transition probability is used to save the probabilities for active calls moving to other neighboring cells. According to next_cell state and transition probability, we can accurately predict the probabilities for mobile hosts moving to other neighboring cells. Therefore, we can dynamically adjust bandwidth reservation requests sending to neighboring cells by the latest transition probability and the number of active calls in this cell. We analyze the proposed mechanism through a mathematical model. In the model, we build a four-dimension Markov Chain and use MATLAB[41] tool to evaluate blocking probability, channel throughput and utilization. We found out that blocking probability of handoff call can be decreased and channel utilization can be increased through the proposed channel allocation mechanisms with high and low priority support.