In this work, an investigation was performed to assess the feasibility of passive gamma-ray spectrometry using adaptive digital pulse processing for online interrogation of pebble bed reactor (PBR) fuel. This work incorporates the physics of the radiation emission phenomenon with advanced pulse processing techniques to develop a high-resolution gamma-spectrometry system capable of handling ultrahigh count rates in various applications of nuclear science and technology. Computational modeling was used to simulate the irradiation of PBR fuel and to design the adaptive digital pulse processing–based gamma-ray spectrometry system. Monte Carlo simulations were performed to study the gamma-ray spectra of the PBR fuel and to perform coupled photon-electron transport analysis to calculate the pulse-height spectrum of PBR fuel. A Monte Carlo computer routine was used to predict the effect of pulse pileup at high-count-rate conditions. This code utilizes the random interval distribution function based on Poisson statistics to simulate the pileup behavior. Combined with pileup logic, a recursive trapezoid filter with adaptive shaping parameters was implemented to simulate the pileup behavior of a digital gamma-ray spectrometry system. The adaptive shaping algorithm selects the rise time of the trapezoid shaping filter based on the separation between the input pulses for each incoming signal. The simulation results using the proposed adaptive digital pulse processing demonstrated that with the improved energy resolution, the burnup information can be more accurately determined on a pebble-by-pebble basis as compared to fixed shaping, and tasks related to in-core fuel management, safeguards, and waste management become feasible to perform efficiently and accurately.