Network coding and cooperative communication have received considerable attention from the research community recently in order to mitigate the adverse effects of fading in wireless transmissions and at the same time to achieve high throughput and better spectral efficiency. In this work, we analyze a network coding scheme for a cooperative communication setup with multiple sources and destinations. The proposed protocol achieves the full diversity order at the expense of a slightly reduced multiplexing rate compared to existing schemes in the literature. We show that our scheme outperforms conventional cooperation in terms of the diversity-multiplexing tradeoff.