Different wireless channels may experience different kinds of channel fading due to the complexity of practical situations exposed to the impact of channel estimation error and cochannel interference. To coincide with the practical scenarios, the outage performance of the two-way relaying system is investigated under the Rayleigh fading environment and Rayleigh-Rice mixed fading environment, respectively. First, the system model and the system protocol are presented. Then, based on the expression of the signal-to-interference-plus-noise ratio at the receiver, the closed-form expressions for the outage probabilities are derived for Rayleigh fading environment and Rayleigh-Rice mixed fading environment, respectively. Finally, the optimum relay position selection is discussed considering the channel estimation error and the co-channel interference in the two-way relaying system, and the closed-form expression for the optimum relay position is derived . Simulation results verify the correctness of the outage probability and the optimum relay position analysis, and reveal that channel estimation error and the co-channel interference have great impact on the system performance. Furthermore,the performance declines visibly when the channel estimation quality order is less than 1, and becomes better when the fading coefficient increases.