A noise reduction system and method suitable for hands-free communication comprises a first microphone located in a wireless or cordless headset and a second microphone located within a separate communication device. The first microphone may be placed within a headset attached to or near the ear of the user while the second microphone may be located further away from the user's mouth. The first microphone collects the intended voice signal and ambient background or environmental noise while the second microphone primarily collects ambient noise rather than a voice signal. The inputs to the two microphones are synchronized and the ambient noise of the second microphone is used to compensate or remove noise from the first microphone, such as by subtracting the noise from the second microphone from the input of the first microphone. Noise reduction or noise cancellation is achieved through continuous time quadrant modulation, environmental noise counterbalancing, and/or through other means.