Methods and systems are provided for operating a variable displacement engine that includes a knock control system. Engine knock background noise levels determined during all cylinders operating mode may be applied when one or more cylinders are deactivated to determine the presence or absence of engine knock. Additionally, engine knock background noise levels determined during all cylinders operating mode may be applied when one or more cylinders are reactivated such that the engine operates with all cylinder combusting so that the possibility of indicating knock when knock is not present may be avoided.