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Decoding of a correlative level coding or partialresponse signaling system is discussed in an algebraic framework. A correction scheme in which the quantizer Output includes ambiguity levels is proposed. The implementation and algorithm of error correction is discussed in some detail. An optimum design of the quantizer based on Chow's earlier work is discussed. Both analytical and simulation results on the performance of the proposed decoding scheme are presented. An asymptotic expression for the decoding error rate is derived in closed form as a function of the channel signal-to-noise ratio. This is also compared with the conventional bit-by-bit detection method and the maximumlikelihood decoding method recently studied.