A subcarrier is a separate analog or digital signal carried on a main radio transmission, which carries extra information such as voice or data. More technically, it is an already-modulated signal, which is then modulated into another signal of higher frequency and bandwidth. This is an early and simple method of multiplexing.

Stereo broadcasting is made possible by using a subcarrier on FM radio stations, which takes the left channel and "subtracts" the right channel from it — essentially by hooking up the right-channel wires backward (reversing polarity) and then joining left and reversed-right. The result is modulated with suppressed carrier AM, more correctly called sum and difference modulation or SDM, at 38 kHz in the FM signal, which is joined at 2% modulation with the mono left+right audio (which ranges 50 Hz ~ 15 kHz). A 19 kHz pilot tone is also added at a 10% modulation to trigger radios to decode the stereo subcarrier, making FM stereo fully compatible with mono.

Once the receiver demodulates the L+R and L−R signals, it adds the two signals ([L+R] + [L−R] = 2L) to get the left channel and subtracts ([L+R] − [L−R] = 2R) to get the right channel. Rather than having a local oscillator, the 19 kHz pilot tone provides an in-phase reference signal used to reconstruct the missing carrier wave from the 38 kHz signal.