A novel and useful baseline wander correction mechanism for use with transformer coupled baseband communication receivers. Parametric estimation of the transformer model is used estimate and cancel the baseline wander effect. A parametric model is used to model the baseline wander impairment created by the transmitter and receiver transformers as a high pass filter having an exponential decay parameter alpha. A correction signal for both the far end and echo signal paths are calculated and summed to generate a total correction signal. The total correction signal is partitioned into an analog correction signal that is applied to the analog portion of the communications receiver and into a digital correction signal that is similarly applied to the analog portion of the communications receiver.