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A novel link adaptation scheme using linear Auto Regressive (AR) channel estimation algorithm to enhance the performance of auto rate selection mechanism in IEEE 802.11g is proposed. Low efficiency caused by time interval between the Received Signal Strength (RSS) measured time and the frame transmitted time is overcome. The best rate is selected based on data payload length, frame retry count and the estimated RSS value. Simulation results show that the proposed scheme enhances mean throughput performance up to 7% in saturation state, and up to 24% in finite load state compared with those non-estimation schemes. Performance enhancements in average drop rate and average number of transmission attempts per data frame delivery also validate the effectiveness of the proposed scheme.