In this paper, an acoustic echo canceller (AEC) based on an M-channel infinite-impulse response (IIR) cosine-modulated filter bank (CMFB) with near-perfect reconstruction (PR) property is proposed. The use of a 2-channel lossless lattice section with 1st order allpass filter in the design of the prototype filter that is common to both the analysis and the synthesis filter banks permits the filter bank design to be simple and allows the prototype filter to have better stopband attenuation and sharper roll-off characteristics than that of previous designs of similar complexity. The effectiveness of AEC based on the proposed IIR CMFB is evaluated in terms of the echo return loss enhancement (ERLE).