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Introduction: The subcutaneous ICD system (S-ICD) has been shown to be a safe and effective treatment for patients at risk for sudden cardiac death. This device reliably detects ventricular tachyarrhythmias with a low incidence of inappropriate shocks for supraventricular arrhythmias. However, T-wave oversensing (TWOS) is more common with the S-ICD compared with transvenous systems. We developed a novel discrimination algorithm to reduce TWOS without compromising tachyarrhythmia discrimination., Methods and Results: The algorithm was developed using a database of recorded episodes, including 244 appropriate therapies for ventricular arrhythmias and 133 episodes with an inappropriate detection due to TWOS, and using a computer model that simulates the S-ICD system. An independent set of data of 161 TWOS episodes, 137 ventricular and 328 supraventricular episodes, was used to validate the algorithm on actual device hardware. The S-ICD performance with the new algorithm was compared with the S-ICD without the new algorithm. Development results showed a decrease in inappropriate charge due to TWOS by 30.7 ± 18%. All ventricular arrhythmias were appropriately detected and the time to appropriate charge initiation was not increased. System validation showed that the new algorithm avoided an inappropriate charge due to TWOS by 39.8 ± 11.4%. No decrease in ventricular arrhythmia sensitivity and no significant change in supraventricular specificity were observed., Conclusions: A new algorithm that uses correlation of the existing complex to previous complexes reduced TWOS episodes by approximately 40%. The algorithm has potential for a clinically meaningful decrease in inappropriate shocks., (© 2015 Wiley Periodicals, Inc.)