A non-linear, order-statistic filter that is able to detect transients within an ambient signal environment without the transients affecting the setting of the transient detection threshold. The filter obtains a power spectral estimate (PSE) signal for each one of a plurality of predetermined bandwidth portions of the ambient input signal. Specific PSE magnitude values making up the PSE signal are sorted and ordered from smallest to largest. An average PSE magnitude value is obtained for a preselected center range of the specific PSE magnitude values, and this value is used to set the transient signal detection threshold for the filter.