Provided herein are techniques for improved optical absorption measurements in the presence of time-varying etalons. In one aspect, a method for dynamic etalon fitting for adaptive background noise reduction in an optical sensor is provided. The method includes the steps of: obtaining a zero-gas spectrum measured using the optical sensor; obtaining an analyte gas spectrum of a target trace gas measured using the optical sensor; comparing the zero-gas spectrum and the analyte gas spectrum using fit parameters that compensate for drifting etalons in the optical sensor; and dynamically extracting the drifting etalons from the analyte gas spectrum to retrieve concentration of the target trace gas.