A method of operating a distributed call progress tone detection system. In one embodiment, the method includes: (1) receiving requests from an application over said packet network and transmitting transmit call and control processing commands to a switching partition via a main control unit, (2) providing an interface to corresponding access nodes via line interface modules, (3) generating a call on a first of said line interface modules, (4) employing an input-output distributor to interconnect a call progress tone detector and said first of said line interface modules to allow said call progress tone detector to perform a call progress tone detection analysis and generate an indication thereof with respect to said first of said line interface modules and (5) creating an interconnection between said first of said line interface modules and a second of said line interface modules based on said indication via said input-output distributor and notifying said application of said interconnection.