This paper advocates a distributed role selection strategy to coordinate two-way relaying transmissions among three cooperative nodes. For such, the local channel state information comparison and decision feedback mechanism are merged into classical analog network coding (ANC) and time division broadcast (TDBC) protocols such that the cooperative role of each node can be designated in a distributed fashion. We refer to this distributed role selection rule as d-ROSE. In both ANC-based and TDBC-based two-way relaying scenarios, strict proof for the equivalence of d-ROSE and optimal ROSE is given, which indicates that albeit the different form, their final role decision is essentially the same. Outage analysis for the d-ROSE strategy is carried out and the scaling law of the system outage behavior at high signal-to-noise ratio (SNR) is characterized, which manifests that d-ROSE can enhance the system diversity gain to one-order higher relative to the ANC and TDBC protocols. It is also shown that d-ROSE can reduce the signaling overhead upto 60% to perform the outage-optimal role selection. Finally, the impacts of node placement on the outage performance as well as the average signaling overhead of d-ROSE are numerically evaluated and some useful conclusions are drawn. © 2015 IEEE.