A novel phase-encoded fringe-adjusted joint transform correlator (JTC) (pFJTC) technique is proposed that employs phase encoding and nonlinear Fourier plane apodization to optimize correlation performance. For input scenes involving multiple identical targets, existing JTCs require multistep on-line processing to eliminate the false alarms and other artifacts. The proposed pFJTC eliminates the possibility of false target detection by eradicating the false correlation peaks and alleviates the effects of noise and other artifacts; in just one step, thus ensuring higher processing speed. The phase-encoding operation and the Fourier plane apodization have no detrimental effect on the processing speed. This technique ensures better utilization of the space- bandwidth product by using separate input and reference planes and by yielding only one peak per target instead of a pair of peaks produced by alternative JTCs. An all-optical implementation for the pFJTC technique is proposed and computer simulation results are presented.