System and method embodiments are provided for sparse beamforming design. In an embodiment, a method of designing sparse transmit beamforming for a network multiple-input multiple output (MIMO) system includes dynamically forming, by a cloud central processor, a cluster of transmission points (TPs) for use in transmit beamforming for each of a plurality of user equipment (UEs) in the system by optimizing a network utility function and system resources; determining, by the cloud central processor, a sparse beamforming vector for each UE according to the optimizing; and transmitting, by the cloud central processor, a message and first beamforming coefficients to each TP in the formed cluster associated with a first UE in the plurality of UEs, wherein each TP in the formed cluster associated with the first UE correspond to nonzero entries in a first beamforming vector corresponding to the first UE.