A method and apparatus for allocating resources to a low cost user equipment (UE) in a wireless communication system is provided. A base station (BS) allocates resource blocks including a punctured direct current (DC) subcarrier to a low cost UE, and communicating with the low cost UE by using the allocated resource blocks. The allocated resource blocks may not be located at center of a set of resource blocks that the low cost UE can access at a given subframe.