Walsh functions are used to construct binary signals suitable for reactor dynamics testing. It is shown that these signals have many properties which may make them preferable to binary signals constructed from a trigonometric basis set. It is further shown that system response characteristics determined on the basis of input/output analysis are identical to Fourier analysis if the Walsh basis set is used and the system is unperturbed by noise. If noise is present in the system response function, it is shown through sample calculations that the squared error of the transfer function estimate is approximately 50% smaller using signals and analysis based on the Walsh basis functions than is found using trigonometric basis functions.