This paper presents a data-processing technique that improves the accuracy and precision of absorption-spectroscopy measurements by isolating the molecular absorbance signal from errors in the baseline light intensity ( I o ) using cepstral analysis. Recently, cepstral analysis has been used with traditional absorption spectrometers to create a modified form of the time-domain molecular free-induction decay (m-FID) signal, which can be analyzed independently from I o . However, independent analysis of the molecular signature is not possible when the baseline intensity and molecular response do not separate well in the time domain, which is typical when using injection-current-tuned lasers [e.g., tunable diode and quantum cascade lasers (QCLs)] and other light sources with pronounced intensity tuning. In contrast, the method presented here is applicable to virtually all light sources since it determines gas properties by least-squares fitting a simulated m-FID signal (comprising an estimated I o and simulated absorbance spectrum) to the measured m-FID signal in the time domain. This method is insensitive to errors in the estimated I o , which vary slowly with optical frequency and, therefore, decay rapidly in the time domain. The benefits provided by this method are demonstrated via scanned-wavelength direct-absorption-spectroscopy measurements acquired with a distributed-feedback (DFB) QCL. The wavelength of a DFB QCL was scanned across the CO P(0,20) and P(1,14) absorption transitions at 1 kHz to measure the gas temperature and concentration of CO. Measurements were acquired in a gas cell and in a laminar ethylene–air diffusion flame at 1 atm. The measured spectra were processed using the new m-FID-based method and two traditional methods, which rely on inferring (instead of rejecting) the baseline error within the spectral-fitting routine. The m-FID-based method demonstrated superior accuracy in all cases and a measurement precision that was ≈ 1.5 to 10 times smaller than that provided using traditional methods.