A novel coefficient penalized regularization method for generalized autocalibrating partially parallel acquisitions (GRAPPA) reconstruction is developed for improving MR image quality. In this method, the fitting coefficients of the source data are weighted with different penalty factors, which are highly dependent upon the relative displacements from the source data to the target data in k-space. The imaging data from both phantom testing and in vivo MRI experiments demonstrate that the coefficient penalized regularization method in GRAPPA reconstruction is able to reduce noise amplification to a greater degree. Therefore, the method enhances the quality of images significantly when compared to the previous least squares and Tikhonov regularization methods. Magn Reson Med 69:1109–1114, 2013. © 2012 Wiley Periodicals, Inc.