This paper describes $\mu$-law PCM/ADPCM Code Conversion System. The system algorithm is computer-simulated, and with the result of simulation the system is designed by using the Am 2900 family's Bit-Slice Microprocessors which have a high-speed processing power. The ADPCM algorithm is based on Jayant's model and the converting algorithm between $\mu$-law PCM and linear PCM is developed according to the CCITT Recommendation G. 711.