A transmit signal second-order inter-modulation (IM2) canceller for a portable handset using a full duplex mode of operation (e.g., WCDMA) is used to controllably reduce IM2 introduced by a transmit signal that appears in a received signal in a receive channel of the portable handset. The transmit signal IM2 canceller includes a delay estimator and a digital signal adjuster. The delay estimator receives a first input from a receive channel and a second input from a transmit channel. The delay estimator generates an estimate of the IM2 that the transmit channel introduces in the receive channel. The digital signal adjuster removes the estimate of the IM2 before forwarding a modified receive channel signal to a baseband subsystem of the portable handset.