In this paper, we propose a modulation multiplexing distributed space-time coding for two-user cooperative diversity in wireless network, in which the information of one user lies in the in-phase axis (I axis), while that of the other user lies in quadrature-phase axis (Q axis). Since two users share both time and frequency resource in co-operation sub-frame, the proposed scheme is more bandwidth efficient. We characterize performance of the proposed scheme in symmetric interuser case. Simulation results show that the proposed scheme outperforms the amplify-to-forward cooperative system. Compared to the distributed space-time coding with time-division multiple accesses cooperative system, the proposed scheme achieves the same diversity gain but loses some coding gain. However, when the selection relay protocol is adopted for the proposed scheme, coding gain is also achieved.