An adaptive polarization-mode dispersion (PMD) compensation system has been developed to cancel the effects of first-order PMD by producing a complementary PMD vector in the receiver. Control parameters for the PMD compensation system comprised of a polarization controller and a PMD emulator are derived from the nonreturn-to-zero (NRZ) signal in the channel to be compensated. Estimates of the link's differential group delay (DGD) and principal states of polarization (PSPs) based on this signal are reliable when the signal power is equally split between the link's two PSP's; however this condition cannot be assumed. To meet this requirement, we scramble the state of polarization (SOP) of the input signal at a rate much greater than the response time of the PMD monitor signal so that each sample represents many different SOP alignments. This approach allows the effective cancellation of the first-order PMD effects within an optical fiber channel.