In this paper, a self-adaptive 2-D continuous-wavelet-transform-based algorithm for extracting wave information from X-band nautical radar images is presented. After investigating the 2-D continuous wavelet transform and its application for radar image processing, it is found that the wavelet scaling parameters will affect the results of wave field analysis. The relation of the scaling parameters to the minimum distinguishable wavenumber is developed using a calibration factor. Optimal empirical values of such calibration factors are determined from a series of simulation data tests for variable wave conditions. An iterative algorithm is then proposed that enables the system to automatically select the optimal calibration factor without requiring a reference to other instrumentation. The algorithm is evaluated using dual-polarized radar data collected on the east coast of Canada. Results of the proposed algorithm are analyzed and compared with in situ TRIAXYS wave buoy data as well as that obtained from the conventional 3-D fast Fourier transform (FFT)-based method. The impact of signal polarization on the results is explored. The agreement between the buoy and FFT results indicates that the proposed algorithm is practical and effective as an alternative to the classic 3-D FFT-based method for retrieving ocean wave information.