In hands‐free speech recognition in which the user speaks at a distance from the microphone, the accuracy of recognition is degraded if the environment is reverberant. The reason for the degradation is that the uttered speech is affected by the surrounding noise and reverberation, which produces a mismatch between the training data and the observed data. In order to cope with such a situation, the authors proposed a speech recognition method by HMM composition, involving the composition of an acoustic transfer function HMM [1, 2]. In that method, however, the acoustic transfer functions must be measured from various points before recognition. This paper proposes a method in which the acoustic transfer function HMM is estimated from the observed signal. In the proposed method, it is not required that the position of the speaker be known. Using adaptation data uttered from an arbitrary point, the HMM is decomposed into the known HMM and another HMM by maximum‐likelihood estimation, and the model parameters are estimated. As a result of a phonemewise 500‐word recognition experiment, the speaker‐dependent recognition rate is improved from 77.2% to 91.2%, and the speaker‐independent recognition rate is improved from 54.4% to 66.2%, demonstrating the effectiveness of the proposed method. © 2000 Scripta Technica, Syst Comp Jpn, 31(5): 77–85, 2000