Abstract-In Cognitive Radio (CR) systems, the data rate of the Secondary User (SU) can be maximized by optimizing the transmit power, given a threshold for the interference caused to the Primary User (PU). In conventional power optimization algorithms, the Gaussian input distribution is assumed, which is unrealistic, whereas the Finite Symbol Alphabet (FSA) input distribution, (i.e., M-QAM) is more applicable to practical systems. In this paper, we consider the power optimization problem in multiple input multiple output orthogonal frequency division multiplexing based CR systems given FSA inputs, and derive an optimal power allocation scheme by capitalizing on the relationship between mutual information and minimum mean square error. The proposed scheme is shown to save transmit power compared to its conventional counterpart. Furthermore, our proposed scheme achieves higher data rate compared to the Gaussian optimized power due to fewer number of subcarriers being nulled. The proposed optimal power algorithm is evaluated and compared with the conventional power allocation algorithms using Monte Carlo simulations. Numerical results reveal that, for distances between the SU transmitter and the PU receiver ranging between 50m to 85m, the transmit power saving with the proposed algorithm is in the range 13 − 90%, whereas the rate gain is in the range 5 − 31% depending on the modulation scheme (i.e., BPSK, QPSK and 16-QAM) used.