In this paper, we develop a downlink dynamic soft frequency reuse (SFR) scheme with inter-cell coordination in orthogonal frequency division multiple access (OFDMA) cellular networks. A clustered base station (BS) coordination strategy is employed to facilitate frequency resource allocation among coordinated sectors. Compared to the traditional static SFR scheme, the proposed scheme can exploit frequency selectivity of wireless channels and multi-user diversity through inter-cell coordination and achieve better performance. Since the proposed approach performs resource allocation in a distributed way, only limited information needs to be shared or exchanged even within a cluster. As shown by computer simulation, compared with the traditional scheme, the proposed one can improve the throughput for those users at the edge of a sector by 41.9% while maintaining the same throughput for those users at the center of a sector.