A noise replacement system and method for providing a synthesized noise replacement signal to an output speech channel in an echo cancellation system. A far-end speech signal transmitted through a communications channel may be passed through an echo channel to produce an echo signal. The echo signal is summed with near-end speech and transmitted back to the far-end in the output speech channel. An echo canceller rejects the echo signal by forming an estimate of the echo signal and subtracting the estimate from the sum of the near-end speech and the echo signal to produce an echo residual signal. When only the far-end speaker is talking, the echo is completely rejected by replacing the echo residual signal with a synthesized noise signal. The noise is synthesized to match the power and spectral characteristics of the actual background noise at the near-end to prevent the far-end speaker from detecting any change in signal characteristics.