In mobile wireless network efficient location management for tracking and finding the mobile users is a critical issue. The traffic for location update can be excessive, especially at the base stations that are near to the location area (LA) boundaries. In this paper we propose a new location update scheme which can significantly reduce the signaling traffic for location update. It is based on the virtual layer approach employing SubMSCs. Here the virtual layer is laid upon the original layer of LA’s such that the mobile terminals moving around the boundary cells of adjacent LA’s become to move within a virtual LA. As a result, the proposed scheme significantly reduces the location update traffic compared to overlapping scheme which is the most recent and efficient location update scheme.