A demodulation circuit, a digital microwave system including the demodulation circuit, and a signal demodulation method are provided. The demodulation circuit includes a first circuit, a second circuit, a third circuit, and a fourth circuit connected in turn. The fourth circuit includes a pulse counting unit and a data decision unit connected in turn. The signal demodulation method includes: performing bandpass filtering on input signals; increasing gains of the bandpass filtered signals; extracting pulse signals are extracted from the gain-increased signals; counting the extracted pulse signals; filtering the pulse signals having counting values falling outside of a predetermined range, and outputting the filtered pulse signals.