Both MR imaging and NMR spectroscopy can suffer from a loss of resolutions when T2 is short compared to the total sampling time Ts due to the exponential decay during sampling. In practice, a relatively long Ts may be chosen so that the truncation artifacts are minimized and the S N is maximized. Therefore T2 deconvolution is desirable in the presence of short T2 components. Resolution enhancement using the conventional apodization filter method is usually associated with a loss of S N and other artifacts such as baseline shift and lineshape distortion. Maximum entropy methods have not proven to be adequate for exact T2 deconvolution when T2 is position or frequency dependent. Other approaches include linear prediction schemes to extract the spectral locations and T2 values. In this paper, a generalized transform matrix inversion interative method is developed for simultaneous T2 extraction and deconvolution. Compared with the conventional Fourier transform method, this method gives considerable resolution enhancement and linewidth reduction for imaging and spectroscopy. It can also be used to complement other methods such as the maximum entropy method to achieve simultaneous resolution enhancement and noise suppression.