A system for calibrating an electronic compass for a vehicle of the type employing a Forward and Lateral magnetoresistive magnetic field sensor. As the vehicle changes headings, the system periodically samples and digitally stores the peaks of the sensor outputs. When the stored peaks indicate a minimum change in the output of the sensors, the system microcomputer calculates a "box" surrounding the subscribed arc of heading changes and computes the center of the "box" as the center of the locus of anticipated peaks for all quadrants and shifts the locus (i.e., "box") to be within the domain of the A/D converter to prevent saturation, which could otherwise occur in the presence of strong remnant magnetic fields in the vehicle. The "box" is updated with each sampling of sensor outputs until the vehicle is eventually headed through all four cardinal compass headings, and the compass is then considered to be fully modeled in the microcomputer.