In order to reveal the defect signature of rolling element bearings or gearboxes,the vibration signals measured on them are usually demodulated by the envelope analysis,i.e.Hilbert Transform.However,the defect signature obtained by this demodulation is often masked by noise.In this paper,a new method of demodulation,Delayed Correlation Envelope analysis is established to suppress the noise.The autocorrelation functions of vibration signals measured on bearings and gearboxes are first computed,which will reduce the noise greatly,but not change the modulation signature of the signals.Then the autocorrelation functions are delayed for some time lags,which will reduce the noise further.The delayed autocorrelation is then demodulated by Hillbert Transform.The effect of time delay on the demodulation results is also discussed here.The effectiveness of this method is confirmed by both simulation and experiment.