Wireless Mesh Networks (WMNs) have emerged recently as a promising technology for next-generation wireless networking to provide wide variety of applications that cannot be supported directly by other wireless networks. In WMNs, security is turning out to be a major concern and little attention has been paid to this topic by the research community. In this paper, we investigate a serious security threat known as the selective forwarding attack (gray hole attack). In a selective forwarding attack, a malicious node refuses to forward all or a subset of the packets it receives. Such selective dropping is challenging to defend against. In this paper, we present an algorithm to defend against selective forwarding attacks based on AODV routing protocol. The first phase of the algorithm is Counter-Threshold Based and uses the detection threshold and packet counter to identify the attacks and the second phase is Query-Based and uses acknowledgment from the intermediate nodes to localize the attacker. We also present simulation results to illustrate the efficiency of the proposed algorithm. To the best of our knowledge, this is the first paper to present an algorithm for defending selective forwarding attacks in WMN.