In a wireless sensor network nodes can be deployed randomly to collect data from an area of interest. So it is mandatory for each node in the network to be aware of its location in the physical world, in order to map the collected information to the base station. Thus, localization becomes an important technique in sensor networks. Further, power conservation is also an important factor as the nodes are operated with limited battery supply. Hence to increase the lifetime of the network, an energy-efficient localization is required. In this paper, a fine-grained paradigm of localizing sensor nodes based on Received Signal Strength (RSS) under controlled power of anchor nodes is proposed. The transmission power control is achieved by Distance Controlled Transmission Power (DCTP) adjustment algorithm where an anchor node closer to an unknown node operates at low transmission power while the one at farther distance operate at high transmission power. Thus based on the distance of the unknown node with anchor node, the transmission power level of anchor is adjusted. This paper also provides analysis of the impact of various transmission power levels on the proposed localization algorithm. Simulation analysis is carried out in Matlab and the results show the performance of the algorithm in terms of localization accuracy and power consumption. ©2010 IEEE.