Power spectrum subtraction is introduced into the joint wavelet transform correlator to improve its performance. Because the joint wavelet transform correlator is not a matched recognition, its performance is quite poor when the conventional joint-transform correlator is employed. By subtracting the power spectra of the target image and the reference image, the power spectrum subtraction technique may greatly improve the joint wavelet transform correlator. In comparison with the conventional joint wavelet transform correlator, the new correlator has narrower dc output, bigger space-bandwidth product, stronger wavelet transform output, and greater background-noise resistance. Both theoretical analysis and computer simulation verify its efficiency.