A method and system is disclosed for dynamic setpoint adjustment during extended frame decoding. In accordance with an example embodiment, upon determining that a frame transmission from an access terminal has not been successfully decoded during a nominal frame period, a base station will implement a gradual increase of the setpoint in small steps over the course of an extended decoding interval. Beginning at the nominal termination target of an nominal frame period that failed to yield a successfully decoded frame, the setpoint is increased in a series of intermediate setpoint steps during a corresponding series of successive, intermediate decoding intervals which add up to the total duration of the extended decoding interval. Decoding during intermediate decoding intervals continues until either the virtual termination target is reached or successful decoding, whichever occurs first.