In this paper, an adaptive soft handoff algorithm, which dynamically calculates the threshold values for soft handoff based on the received signal strength, is proposed for mobile cellular communication systems. An analytical model is developed to study the performance of soft handoff algorithms. Performance is evaluated in terms of the average number active set updates, the mean size of the active set, the mean time of soft handoff, the average signal quality and link degradation probability, where a link degradation is defined to be the event that the signal strength falls below a level required for satisfactory communication. The adaptive soft handoff is shown to yield a significantly better tradeoff than the handoff algorithm with static thresholds.