A recently proposed wavelet domain communication system (WDCS) using transform domain processing is demonstrated as having enhanced interference avoidance capability under adverse environmental conditions. The proposed WDCS and its response to various interference scenarios are modeled and simulation results obtained using MATLAB/sup /spl reg//. Relative to a system without suppression capability and a developmental, Fourier-based transform domain communication system (TDCS), the WDCS provides improved/comparable bit error performance in several interference scenarios - single-tone, multiple-tone, swept-tone, and partial-band interference. The system was evaluated using an E/sub b//N/sub o/ of 4.0 dB and interference energy-to-signal energy (I/E) ratios ranging from 0 dB to 16 dB. For antipodal data modulation cases, the average WDCS bit error performance improvement was 12.4 dB relative to a system without suppression capability, approximately equaling TDCS results. For orthogonal data modulation, average WDCS improvement was 5.7 dB versus 6.8 dB for the TDCS. Collectively, these results indicate the proposed WDCS is a viable option for interference avoidance communications.