A method and system for channel quantization for multiuser diversity are provided. A quantizer may utilize quantization levels determined based on an objective function J that corresponds to a performance metric for a finite-rate feedback multiuser downlink communication system. The quantization levels may be obtained based on the results of maximizing the objective function J by means of an optimization algorithm. The optimization algorithm may be a multivariate optimization algorithm that may be implemented utilizing an iterative approach. The quantizer may utilize the quantization levels to quantize channel state information (CSI) to achieve multiuser diversity in the finite-rate feedback multiuser system. The performance metric may be based on signal-to-noise ratio (SNR), bit error rate (BER), and/or system capacity. The quantization levels may be utilized in a multiuser system where distributed quantization is needed for optimal selection.