The disclosure describes methods for adaptive prediction filtering for digital watermarking applications. The predictive filter is designed to predict the digital watermark signal. In one implementation, there are two stages of prediction filtering. A first stage operates on a suspect signal before detecting any watermark in that signal. This stage adapts the predictive filter to local signal characteristics. A second stage uses known watermark signal elements to adapt a non-linear filter used in extracting message symbols from the suspect signal. This stage produces detection statistics based on a comparison of expected and measured message symbol values, and uses these statistics to adapt the parameters of a predictive filter. This adapted prediction filter is then applied to extract message symbol estimates.