Digital Signal Processing (DSP) techniques are becoming the standard for high quality digital sound on compact disks and digital audio tapes in automotive audio entertainment systems. Incorporating DSP technology to improve the quality of AM (amplitude modulation) and FM (frequency modulation) stereo radio reception assures high fidelity performance for all radio functions. This paper will only deal with the AM stereo problem since the digital FM stereo problem has been resolved and demonstrated already . This paper will discuss Motorola Compatible Quadrature Amplitude Modulation (CQAM) AM stereo decoding and how it can be digitally implemented on a Motorola DSP56001. A complete description of CQAM decoding will be given including a brief overview of how the process can be performed digitally.