A signal separation system and a method for automatically selecting a threshold to separate sound sources. The signal separation system calculates a power sequence for a target signal using a target mask, and a power sequence for an interference signal using a complementary mask, based on signals received from a plurality of microphones; applies a nonlinearity to the target signal power sequence and the interference signal power sequence; calculates a correlation coefficient of the nonlinear target signal power sequence and the nonlinear interference signal power sequence; and sets a noise masking threshold that minimizes the correlation coefficient.