In recent times, sun tracking systems are being increasingly employed to enhance the efficiency of photovoltaic panels by constantly tracking the elevation and azimuth angles of the sun. In this paper, a novel adaptive digital signal processing and control algorithm is presented that optimizes the overall PV system output power by adjusting the position angles of the solar panel on both the elevation and azimuth axes. Since the proposed approach is adaptive in nature, the optimal position angles for the solar panel are iteratively computed using the adaptive gradient ascent method, until the incident solar radiation, and hence the output power is maximized. Furthermore, a Taylor's series approximation is employed for generating a unique optimal position angle increment/decrement at each iteration. Simulation results show that the proposed technique demonstrates fast convergence and excellent tracking accuracy at all times of the day. (C) 2010 Elsevier Ltd. All rights reserved.