Adaptive channel estimation (ACE) and dedicated pilot power adjustment based on the fading-rate measurement is investigated for the pilot-aided direct-sequence (DS) code division multiple access (CDMA) system. A novel adaptive channel estimator is presented, which makes use of an optimum integral duration or selects the optimum finite-impulse response (FIR) filter coefficients based on the fading-rate measurement. Dynamic adjustment of the dedicated pilot power is further proposed for the purpose of increasing the system capacity, based on the fact that the power of the dedicated pilot channel (DPCH) can be reduced when the mobile station moves slowly. Theoretical analysis and computer simulation results show that significant performance improvement can be achieved by using the proposed adaptive channel estimator and the dynamic pilot power adjustment method.