A circuit and method for compensating sigma-delta modulators in A/D and D/A converters is disclosed. Circuits according to the invention use a low-resolution Sigma-Delta encoded version of the signal to inexpensively encode quadratic and cubic compensation terms. These circuits can encode quadratic and cubic compensation signals with acceptably low quantization noise without requiring the use of expensive multi-bit multipliers to compute the square or cube of the signal. The method includes providing a binary word Q or a binary word C (or both) representing the desired amount of quadratic or cubic compensation to apply. Because the encoded quadratic and cubic signals have only one or a few bits, they can be multiplied by Q and C without the use of expensive multi-bit multipliers and applied to the modulator input or output to provide a compensated result.