Coordinate transformation has been proved to be a correct solution when constant modulus algorithm (CMA) is used to equalizer the non-constant modulus signals in the digital communication systems. For the 16-QAM signals the CMA1-2 based on coordinate transformation is proposed. Compared with the traditional CMA1-2 and CMA2-2, the proposed algorithm has the fastest convergence rate and the lowest steady-state mean square error. The computer simulation results demonstrate that the significant improvements in performance are achieved with the proposed algorithm.