Interference mitigation is one of the significant challenges in overlay cognitive radio (CR). This paper proposes a scheme to avoid the interference in an overlay CR scenario by exploiting the polarization diversity and relay cooperation. In this scheme, a dual-polarized antenna is incorporated at the secondary transmitter, one of which acts as a relay to the primary user's signal and cancels out the interference via space-time coding. Analytical results about the error performance and the outage probability for the scheme have been calculated. The performance degradation in the absence of perfect CSI has also been shown. © Springer India 2015.