In spectrum sharing, a spatial separation region is defined around a primary user (PU) where co-channel and/or adjacent channel secondary users (SUs) are not allowed to operate. This region is often called an Exclusion Zone (EZ), and it protects the PU from harmful interference caused by SUs. Unfortunately, existing methods for defining an EZ prescribe a static and an overly conservative boundary, which often leads to poor spectrum utilization efficiency. In this paper, we propose a novel framework—namely, Multi-tiered dynamic Incumbent Protection Zones (MIPZ)—for prescribing interference protection for PUs. MIPZ can be used to dynamically adjust the PU’s protection boundary based on the changing radio interference environment. MIPZ can also serve as an analytical tool for quantitatively analyzing a given protection region to gain insights on and determine the trade-off between interference protection and spectrum utilization efficiency. Using results from extensive simulations and a real-world case study, we demonstrate the effectiveness of MIPZ in protecting PUs from harmful interference and in improving the overall spectrum utilization efficiency.