The concept of eigen decomposition for two-channel signal separation, a novel method of enhancing the desired signal corrupted by interference, is described. The method uses two observations, which come from a pair of single sensors (or beamformers) both of which contain the desired signal and the undesired signal(s). The method assumes that the desired signal and the undesired signal(s) are uncorrelated and the signal-to-noise ratios (the ratio of the desired signal to the undesired signal(s)) of each observation are different. A new algorithm based on eigen analysis has been developed to eliminate the noise components sequentially. The technique has been successfully used to separate a speech signal corrupted heavily by ambient noise, co-talker interference and background music.