In this study, the recovery of valve impact signal from a measured vibration at the engine block has been investigated to diagnose a valve system condition. The complex cepstrum analysis has been applied to recover the valve impact signal, and the recovery signal was accurate enough to utilize the diagnostics. When cepstral analysis has been completed, parametric study took place to modify the signal. Parametric study applied in this work consist of AR Modeling of FRF, ARMA Modeling of raw input signal, and Kalman filtering and adaptive controltheory. Also adequate model order determination criteria has been suggested. The valve impact signal modified by parametric study, has been used for the estimation of valve lash, and the estimation of valve lash can be a useful guide to diagnose the valve system in operating condition."