In this paper, we address the issue of interference alignment (IA) in a two-cell network and consider both inter-cell and intra-cell interferences. For cell one, a linear processing scheme is proposed to align the inter-cell interference to the same signal dimension space of intra-cell interference. For cell two, we propose a distributed interference alignment scheme to manage the interference from the nearby cell. We assume that the relay works in an amplify-and-forward (AF) mode with a half-duplex and MIMO relaying. We show that the composite desired and interfering signals aggregated over two time slots can be aligned such that the interfering signal is eliminated completely by applying a linear filter at the receiver. The precoding matrix of the relay is optimized jointly with the precoding matrix of the base station (BS). The number of data streams is optimized jointly for every user terminal (UT). The degree of freedom (DoF) performance of the proposed scheme as well as the conventional cooperation scheme are derived for multiple antennas at both base stations, relay station and user terminals. Simulation results show that the proposed alignment scheme can achieve a better DoF performance.