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Differential modulation has recently been proposed for wireless relay networks. However, it suffers from a 3-dB performance loss as in point-to-point communication systems. In this paper, we propose a new differential modulation scheme, which is referred as generalized differential modulation (GDM) for wireless networks with amplify-and-forward relaying. In the proposed scheme, each frame transmitted by the source is divided into several blocks, and each block consists of one reference symbol and several normal symbols. The reference symbol in each block is differentially encoded based on the previous reference symbol, whereas the normal symbols are differentially encoded based on the reference symbol in the same block. At the destination, the signals from the source and the relays are combined to improve communication reliability. The proposed scheme has the advantage of allowing power allocation among the reference symbol and the normal symbols to improve the system performance. Numerical results show that the proposed GDM scheme can perform very close to the coherent receiver with perfect channel state information (CSI) in slow-fading channels.