An acoustic echo canceler, needed for hands-free telecommunications in videoconferencing, has been realized with sufficient performance for use in a quiet meeting room. However, demand has been increasing for the use of hands-free teleconferencing in an environment with ambient noise such as conference calls in a noisy office or in a running automobile. In response to such demands, this paper proposes an echo canceler with a capability of simultaneously suppressing stationary ambient noise superposed on the speech and also residual echo, which cannot be eliminated by conventional echo cancelers because it is buried in noise. In this paper, the noise reduction and echo reduction process, based on the short-time spectrum amplitude estimation, is first explained. Then the results of objective evaluation of a test-fabricated echo canceler are presented. The evaluation results confirm that the echo can be reduced by about 30 dB and the ambient noise by about 15 dB even in an environment with ambient noise, allowing satisfactory hands-free conference calling to be realized. © 2004 Wiley Periodicals, Inc. Electron Comm Jpn Pt 3, 88(3): 21–31, 2005; Published online in Wiley InterScience (www.interscience.wiley.com). DOI 10.1002/ecjc.20123