To avoid collisions, Micro Air Vehicles (MAVs) flying in teams require estimates of their relative locations, preferably with minimal mass and processing burden. We present a relative localization method where MAVs need only to communicate with each other using their wireless transceiver. The MAVs exchange on-board states (velocity, height, orientation) while the signal strength indicates range. Fusing these quantities provides a relative location estimate. We used this for collision avoidance in tight areas, testing with up to three AR.Drones in a 4 m × 4 m area and with two miniature drones (≈ 50 g) in a 2 m × 2 m area. The MAVs could localize each other and fly several minutes without collisions. In our implementation, MAVs communicated using Bluetooth antennas. The results were robust to the high noise and disturbances in signal strength. They could improve further by using transceivers with more accurate signal strength readings.