A system and method for controlling ignition timing for an internal combustion engine to suppress engine knocking in which a periodic pseudo random signal (for example, M-series sequence signal) is superimposed on an ignition signal provided at an ignition timing, and a cross-correlation function between the periodic pseudo random signal .chi. and a knocking signal y is calculated to determine an actual knocking level. The ignition timing is then corrected so that the cross-correlation function coincides with a target value which is defined as a value placed in a vicinity of a knocking limit. The ignition timing for the engine is controlled so as to reach the value in the vicinity of the knocking limit but does not exceed the knocking limit.