The disclosure relates to a pre-5th-generation (5G) or 5G communication system to be provided for supporting higher data rates beyond 4th-generation (4G) communication system such as long term evolution (LTE). An operation of a base station to location-based user classification and power allocation in a wireless communication system is provided. The method performed by a base station includes forming a pre-defined terminal group beam, classifying terminals into a plurality of terminal group by using location information of the plurality of terminals, received from the base station, allocating transmit (Tx) power to a terminal in a terminal group based on the location information of the plurality of terminals existing in each terminal group, and adjusting Tx power distributed to each terminal group so that an overall system communication capacity is greatest.