A new non-Fourier data processing algorithm, the filter diagonalization method (FDM), is presented and applied to phase-sensitive 1D and 2D NMR spectra. FDM extracts parameters (peak positions, linewidths, amplitudes, and phases) directly from the time-domain data by fitting the data to a sum of damped complex sinusoids. Grounded in a quantum-mechanical formalism, FDM shares some of the features of linear prediction and other linear algebraic approaches, but is numerically more efficient, scaling like the fast Fourier transform algorithm with respect to data size, and has the ability to correctly handle spectra with thousands or even millions of lines where the competing methods break down. Results obtained on complex spectra are promising.