Dynamic data reconciliation can supply more accurate data for dynamic optimization, dynamic fault diagnosis, and control by means of incorporating process information in some mathematical model. It will be an ill-posed inverse problem if the sensitive input variables are unmeasured; here, the sensitive input variable is defined as the variable that, if it is unmeasured, can only be estimated through the differentiation of other measured variables. In such a case, existing methods cannot obtain correct and usable data effectively. To address the problem, based on the principle of regularization, the wavelets are adopted to construct regular operators. And, a new approach is proposed to determine the optimal scale level corresponding to the optimal approximate operator in which the prior statistical information of the signal is utilized. The algorithm can deal with the estimation of unknown sensitive input variable effectively. The results show that more accurate estimation of the sensitive input variable can be obtained by using the proposed method as compared with the one obtained by using existing collocation methods based on polynomials.