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Localization in wireless sensor network is the key for many applications in which location of occurrence of event is very important. Distance based localization techniques have proved to be more accurate and feasible for the location calculation of the sensor nodes. Moreover, Received Signal Strength Indicator (RSSI) based techniques are well adopted by the researcher to calculate the distance between the sensor nodes. The optimized value of RSSI may estimate the location more precisely. In this paper, Exponential Grey prediction model and weighted predicted RSSI values are utilized to provide estimated values of RSSI which are then optimized using an objective function. The decreasing term used in the differential equation of the Grey prediction model provides better prediction accuracy which if optimized provides efficient result. The conventional Grey prediction model is limited by the sample space and scope of applications. The Exponential Grey prediction model used in the proposed algorithm removes those drawbacks and can be applied in real time applications with larger sample space. The objective function used in the proposed algorithm uses weighting factor to be applied to Grey predicted RSSI and weighted predicted RSSI to estimate the RSSI value more accurately. The objective function calculates more near values of RSSI to localize the node more accurately. The simulation results obtained are compared with the latest techniques of RSSI calculation like weighted centroid method, RSSI quantization, TMA and FRBW algorithm. The results show that the proposed algorithm outperform the existing methods for RSSI estimation.