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In this paper, we introduce a comprehensive analysis of the incremental-best-relay cooperative diversity, in which we exploit limited feedback from the destination terminal, e.g., a single bit indicating the success or failure of the direct transmission. If the destination provides a negative acknowledgment via feedback; in this case only, the best relay among M available relays retransmits the source signal in an attempt to exploit spatial diversity by combining the signals received at the destination from the source and the best relay. Furthermore, we study the end-to-end performance of the incremental-best-relay cooperative-diversity networks using decode-and-forward and amplify-and-forward relaying over independent non-identical Rayleigh fading channels. Closed-form expressions for the bit error rate, the outage probability and average channel capacity are determined. Results show that the incremental-best-relay cooperative diversity can achieve the maximum possible diversity order, compared with the regular cooperative-diversity networks, with higher channel utilization. In particular, the incremental-best-relay technique can achieve M+1 diversity order at low signal-to noise ratio (SNR) and considerable virtual array gain at high SNR.