To meet growing target data rates, future wireless networks will be heterogeneous with macro and pico base stations (BSs). Allocating resources and managing interference between various types of BSs are of primary importance for achieving acceptable throughput in cell edges. In this work, we propose the interference canceling block modulation (ICBM) scheme for interference management in heterogeneous networks. We provide analytical design methods for ICBM and study the application of ICBM in heterogeneous wireless networks. Our results essentially show that ICBM acts as a virtual resource, significantly improving the data rates for cell-edge users as well as the cell average throughput over the conventional techniques in typical interference scenarios arising in heterogeneous networks. © 2012 IEEE.