In a mobile computing environment efficient allocation of wireless channels is consequential to the system performance. This paper presents a distributed channel allocation algorithm based on the concept of dynamic channel boundaries. Under this scheme, each mobile service station (MSS) is assigned a contiguous range of channel not overlapping with those of its neighbors. Channel boundaries between adjacent MSSs are dynamically adjustable through voluntary withdrawals. High efficiency is provided by two important features: early boundary expansion and need-based boundary redrawing. This algorithm imposes a low message volume on the fixed network, has short response times to connection requests and achieves high channel utilization under both evenly and unevenly distributed loads. Channel utilization is further improved if a MSS may borrow channels from its neighbors. Simulation results indicate this algorithm outperforms other distributed channel allocation algorithms.