In recent years there has been renewed interest in using diode laser based sensors for environmental monitoring, industrial process control, and medical diagnostics applications. Diode lasers have the advantages of small size, non-intrusiveness, speed, ease of use, and high detection sensitivity. Several spectroscopic detection techniques can be employed with diode lasers, and digital signal processing algorithms can be used to enhance the detection sensitivity of a system. In our laboratory we used the following digital signal processing techniques to enhance the sensitivity and accuracy of near- and mid-infrared diode laser sensors: digital bandpass, Wiener, Kalman, and matched filtering, and a general least-squares fit. These digital signal processing algorithms have enhanced the signal-to-noise ratio of our sensors by an order of magnitude.