A data acquisition system uses an analog-to-digital converter (ADC) that includes a prediction feedback element. Using the computing power of a digital signal processor, the system predicts the next sample of the target signal based on pre-defined rules and previous samples. This digital prediction is converted to an analog signal using a digital-to-analog converter (DAC). An analog error summer compares the predicted signal with the target signal and creates an error signal. The digital signal processor uses the prediction error to more accurately predict the next sample. A negative feedback loop is thus formed by this system to drive the prediction error toward zero. Operating on the relatively small error signal in the forward and feedback paths enhances the conversion performance and data transfer efficiency.