This study presents a new algorithm for detecting dual-tone multi-frequency (DTMF) signals. The discrete multi-frequency transform (DMFT) method with optimal phase was employed to reduce the DTMF detection computations. With the DMFT approach, the pass-band ripple is employed as a cost function, and the optimal phase can be obtained using the open-loop search method. Compared to the traditional discrete Fourier transform (DFT) approach, not only is a computational saving of 75% to 83% achieved, but spectrum efficiency is also maintained. These experimental results demonstrate the excellent performance of the DMFT method.