An echo cancellation circuit for an RFID reader and the method thereof are provided. The echo cancellation circuit includes a gain calculator, a gain adjustment circuit, and a subtraction circuit. The gain calculator provides a complex gain value according to a carrier signal and a received signal through an adaptive algorithm. The gain adjustment circuit is coupled to the gain calculator. The gain adjustment circuit multiplies the carrier signal by the complex gain value, and outputs the result of the multiplication. The subtraction circuit is coupled to the gain adjustment circuit. The subtraction circuit subtracts the output of the gain adjustment circuit from the received signal, and then provides the result of the subtraction as the output signal of the echo cancellation circuit.