Nowadays IEEE 802.11 wireless local area networks (WLANs) support multiple transmission rates. To achieve the best performance, transmitting stations adopt the various forms of automatic rate fall-back (ARF). However, ARF suffers from severe performance degradation as the number of transmitting stations increases. In this paper, we propose a new rate adaptation scheme which adjusts the ARF's up/down threshold according to the channel contention level. Simulation result shows that the proposed scheme achieves fairly good performance compared with the existing schemes.