Recommendation system is one of the most important technologies in E-commerce. With the development of E-commerce, the magnitudes of users and commodities grow rapidly, resulted in the extreme sparsity of user rating data. Traditional similarity measure methods work poor in this situation, make the quality of recommendation system decreased dramatically. To address this issue a novel collaborative filtering algorithm based on item rating prediction is proposed. This method predicts item ratings that users have not rated by the similarity of items, then uses a new similarity measure to find the target users?neighbors. The experimental results show that this method can efficiently improve the extreme sparsity of user rating data, and provid better recommendation results than traditional collaborative filtering algorithms.