In this paper, we consider the issue of blind detection of Alamouti-type differential space-time (ST) modulation in static Rayleigh fading channels. We focus our attention on a π/2-shifted BPSK constellation, introducing a novel transformation to the received signal such that this binary ST modulation, which has a second-order transmit diversity, is equivalent to QPSK modulation with second-order receive diversity. This equivalent representation allows us to apply a low-complexity detection technique specifically designed for receive diversity, namely, scalar multiple-symbol differential detection (MSDD). To further increase receiver performance, we apply an iterative expectation-maximization (EM) algorithm which performs joint channel estimation and sequence detection. This algorithm uses minimum mean square estimation to obtain channel estimates and the maximum-likelihood principle to detect the transmitted sequence, followed by differential decoding. With receiver complexity proportional to the observation window length, our receiver can achieve the performance of a coherent maximal ratio combining receiver (with differential decoding) in as few as a single EM receiver iteration, provided that the window size of the initial MSDD is sufficiently long. To further demonstrate that the MSDD is a vital part of this receiver setup, we show that an initial ST conventional differential detector would lead to a strange convergence behavior in the EM algorithm.