An apparatus and method for generating a Channel Quality Indicator (CQI) in a wireless communication system are provided. The method includes receiving a Modulation and Coding Scheme (MCS) index and resource allocation information of a traffic channel and calculating a spectral efficiency at a particular time point, determining a temporary CQI index having a spectral efficiency closest to the calculated spectral efficiency in an index set, reading a CQI metric a time τ before the particular time point, determining, if the temporary CQI index is reported at the particular time point, an error rate based on the CQI metric, the error rate being a probability of an error occurring in a traffic channel after the time τ, receiving an error check result of the traffic channel transmitted at the particular time point and calculating a new error rate by applying a weight to the error check result and the error rate, and determining a CQI index to be fed back to a transmitter using the new error rate. Hence, the CQI index which maximizes spectral efficiency is determined and a Physical Downlink Shared CHannel (PDSCH) acknowledgement (ACK)/negative acknowledgement (NACK) probability is directly estimated adaptively according to a change in channel, thereby providing useful performance in various channel environments.