In continuous-wave near-infrared spectroscopy (CW-NIRS), changes in the concentration of oxyhemoglobin and deoxyhemoglobin can be calculated by solving a set of linear equations from the modified Beer-Lambert Law. Cross-talk error in the calculated hemodynamics can arise from inaccurate knowledge of the wavelength-dependent differential path length factor (DPF). We apply the extended Kalman filter (EKF) with a dynamical systems model to calculate relative concentration changes in oxy- and deoxyhemoglobin while simultaneously estimating relative changes in DPF. Results from simulated and experimental CW-NIRS data are compared with results from a weighted least squares (WLSQ) method. The EKF method was found to effectively correct for artificially introduced errors in DPF and to reduce the cross-talk error in simulation. With experimental CW-NIRS data, the hemodynamic estimates from EKF differ significantly from the WLSQ (). The cross-correlations among residuals at different wavelengths were found to be significantly reduced by the EKF method compared to WLSQ in three physiologically relevant spectral bands 0.04 to 0.15 Hz, 0.15 to 0.4 Hz and 0.4 to 2.0 Hz (). This observed reduction in residual cross-correlation is consistent with reduced cross-talk error in the hemodynamic estimates from the proposed EKF method.