This paper addresses distributed precoding design for MIMO interference networks, where multiple MIMO links share the same bandwidth. In our proposed design, the precoding matrix for an individual link is given as the product of two matrices obtained in two sequential steps. In particular, the first matrix is derived by maximizing the desired signal power given the leakage power as a penalty and the second matrix is obtained by suppressing the interference among data streams belonging to one link (inter-stream interference). Comparing to the naive precoding design, where each transmitter selfishly employs waterfilling transmission scheme, the achievable rate achieved by our proposed two-step precoding design increases as the SNR increases. Moreover, the performance gain of our proposed precoding design over the naive design depends on the available spatial degrees-of-freedom.