This thesis examines applications of Digital Signal Processing to the analysis, transformation, and resynthesis of musical audio. First I give an overview of the human perception of music. I then examine in detail the requirements for a system that can analyse, transcribe, process, and resynthesise monaural polyphonic music. I then describe and compare the possible hardware and software platforms. After this I describe a prototype hybrid system that attempts to carry out these tasks using a method based on additive synthesis. Next I present results from its application to a variety of musical examples, and critically assess its performance and limitations. I then address these issues in the design of a second system based on Gabor wavelets. I conclude by summarising the research and outlining suggestions for future developments.