An adaptive handset interface method and apparatus for interfacing a two-wire analog telephone instrument, such as a modem, fax modem, facsimile machine or teleconferencing device, to a digital, analog or hybrid telephone system, such as a private branch exchange (PBX). The interface device is suitable for use with a variety of PBX's produced by different manufacturers, despite differences in signalling characteristics between the PBX and an associated PBX-compatible telephone. In a preferred embodiment, the invention does not require access to a handset port of a PBX-compatible telephone. The interface device is connected to the extension line along with a PBX-compatible telephone. An analog telephone instrument is then connected to the interface device. In order to communicate with the PBX using a communication protocol appropriate to the PBX, the interface device "learns" the characteristics of the PBX. This is accomplished by: determining whether the telephone system is an analog or digital telephone system; and, if the telephone system is a digital telephone system, monitoring communications between the PBX and the PBX-compatible telephone. Then, the interface device is configured according to the appropriate protocol by retrieving set of operational parameters from a plurality of such sets pre-stored in a memory device within the interface device. The learning technique allows the interface device to automatically adapt itself to variations in signalling characteristics between the PBX and PBX-compatible telephone sets among the different PBX manufacturers.