A system and method using Differential Pulse Position Modulation (DPPM) to encode digital data so that it can be transmitted using an infrared (IR) link. The digital data is then decoded upon receipt. This invention can be implemented in software and run on an FPGA (or the like) for prototyping and integration with existing designs. The encoding, decoding and sensitive timing are handled by dedicated hardware, which greatly increases the speed of these processes because it frees up the processor to accomplish other tasks.