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Acoustic echo cancellation (AEC) is critical for telecommunication applications involving two or more locations such as teleconferencing. It is also challenging because of loudspeaker's nonlinearity, real-time implementation requirement, and multipath effects of indoor environments. This paper addresses the nonlinear AEC problem. We use a Hammerstein model to describe the memoryless nonlinearity of loudspeaker concatenated with a linear room impulse response. We propose a method using a pseudo magnitude squared coherence (MSC) function to identify the nonlinearity in the Hammerstein system and develop an on-line AEC algorithm. Our method identifies nonlinearity without knowing the linear block in the Hammerstein system, which guarantees the stability of the algorithm and leads to a faster convergence rate. Moreover, several alternative criteria based on the MSC function are also proposed for nonlinearity identification. Effectiveness of the proposed algorithms is demonstrated through computer simulations.