This paper proposes a Distance Based Transmission Power Control (DBTPC) scheme for selecting Optimal Transmission Power for Indoor Wireless Sensor Network. The proposed work consists of two phases namely Localization phase and data transfer phase. In Localization phase, the relative coordinate of the unknown sensor node with respect to anchor sensor node is estimated by the proposed Received Signal Strength (RSS) based localization algorithm. By performing neighbor discovery process, each node obtains the distance information of its neighboring nodes. Based on this information, in data transfer phase it dynamically controls its transmission power level to reach their neighboring node with acceptable RSS value. This is achieved by the proposed distributed Distance Based Transmission Power Control (DBTPC) scheme. The Optimal Transmission Power (OTP) can be adaptively selected by the proposed DBTPC scheme. This ensures energy efficiency in sensor node and thereby increases the lifetime of the network. © 2010 Springer-Verlag Berlin Heidelberg.