Abstract: The data transfer is defined as connection-oriented and two-phase activation model is employed to set up connection in IEEE 802.16 networks. Considering that free resource is exhausted but some resources is reserved for those admitted service flows, a novel Call Admission Control (CAC) algorithm which is based on borrowing the reserved resources to admit the new active service flows is proposed. The 3-D Markov chain model is presented. The performance of algorithm is analyzed theoretically and an algorithm for searching two thresholds is developed. Simulation results show that the proposed CAC algorithm can reduce the blocked probability of new service flows and improve the ratio of bandwidth utilization, while the successful activation ratio of admitted-without-activated service flows declines slightly.