An advanced continuous wavelet transform algorithm for digital interferogram analysis and processing is proposed. The algorithm is an extension of the traditional wavelet transform; the mother wavelet and normalization parameter are selected based on the characteristics of optical interferograms. To reduce the processing time, a fast Fourier transform scheme is employed to implement the wavelet transform calculation. The algorithm is simple and is a robust tool for interferogram filtering and for whole-field fringe and phase information detection. The concept is verified by computer simulation and actual experimental interferogram analysis.