A decision-directed extension to the passive phase conjugation (PPC) technique of array demodulation for underwater communications channels is presented. The PPC method utilizes a probe signal from the transmitter to exploit the time-reversal concept in a one-way fashion at the receiver on subsequent unknown data signals [D. R. Jackson et al., Conf. Rec. 34th Asilomar Conf. on Signals, Syst., and Comp., Vol. 1, 680–683 (2000)]. PPC demonstrated excellent equalization of communication bursts in shallow water with sparse array reception. The decision-directed extension to PPC presented here virtually eliminates the need for repeated channel probing, while improving channel estimation in rapidly varying, noisy environments. The technique utilizes decision-directed channel modeling in a fixed-window linear statistical framework, a deterministic least squares optimization criteria, and robust conjugate-gradient numerical methods driving the PPC demodulator. The resulting architecture scales linearly with the number of sensors, has a per-sensor complexity competing with fast-RLS algorithms, and avoids performance limitations of both LMS and E-RLS. Three difficult shallow water demonstrations at 1–5 km show robust channel tracking with good BER and excellent equalization performance. [Work supported by ONR.]