Provided is a method and system for signal-driven recovery of a digital pulse stream. The method includes receiving initial parameters including the base characteristics of a pulse signal, the characteristics including the maximum pulse interval. An incoming analog signal is converted to a digital signal and sampled a predetermined number of times at intervals greater than the maximum pulse interval to record a set of minimum signal values and a set of maximum signal values. Each set is averaged to provide an average minimum value and an average maximum value. Based on these values at least one threshold value is then determined, and the digital pulse stream is identified based on the threshold values. The method is repetitive, continually re-determining the threshold values so as to adapt to changes in the incoming signal. A system for performing the method is also provided.