A system is provided for performing location update in a wireless mobile communication system that uses an Internet protocol (IP) address and is classified as at least one paging group. A serving base station (BS) sends a message including an identifier of a paging group where the serving BS is located, determines whether there is a change in IP subnet of a mobile station (MS) upon receipt of a location update request from the MS, and upon recognizing a change in IP subnet of the MS, stores information on a new IP subnet and notifies the change in the IP subnet to the MS. Upon detecting a need for location update, the MS sends a request for location update to a serving BS, and receives a location update success notification and an allocated temporary IP address from the serving BS.