<ownershipDocument>
    <schemaVersion>X0101</schemaVersion>

    <documentType>4</documentType>
<periodOfReport>2003-07-02</periodOfReport>
<notSubjectToSection16>0</notSubjectToSection16>
    <issuer>
        <issuerCik>0000741696</issuerCik>
        <issuerName>APPLIED SIGNAL TECHNOLOGY INC</issuerName>
        <issuerTradingSymbol>APSG</issuerTradingSymbol>
</issuer>
<reportingOwner><reportingOwnerId>
            <rptOwnerCik>0001020843</rptOwnerCik>
            <rptOwnerName>ELLIMAN DAVID</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>  </rptOwnerStreet1>
            <rptOwnerStreet2>  </rptOwnerStreet2>
            <rptOwnerCity>  </rptOwnerCity>
            <rptOwnerState>  </rptOwnerState>
            <rptOwnerZipCode>  </rptOwnerZipCode>
        </reportingOwnerAddress>
            <reportingOwnerRelationship>
<isDirector>1</isDirector>
<isOfficer>0</isOfficer>
<isTenPercentOwner>0</isTenPercentOwner>
<isOther>0</isOther>
<officerTitle></officerTitle>
<otherText></otherText>
</reportingOwnerRelationship>
</reportingOwner>
<nonDerivativeSecurity><securityTitle><value>Common Stock, Without par value</value>
</securityTitle>
<transactionDate><value>2003-07-02</value>
</transactionDate>
<transactionCoding><transactionFormType>4</transactionFormType>
<transactionCode>J</transactionCode>
<equitySwapInvolved>0</equitySwapInvolved>
</transactionCoding>
<transactionAmounts><transactionShares><value>36</value>
</transactionShares>
<transactionValue><value>17.2236</value>
</transactionValue>
<transactionAcquiredDisposedCode><value>D</value>
</transactionAcquiredDisposedCode>
</transactionAmounts>
<postTransactionAmounts><sharesOwnedFollowingTransaction><value>0</value>
</sharesOwnedFollowingTransaction>
</postTransactionAmounts>
<ownershipNature><directOrIndirectOwnership><value>I</value>
</directOrIndirectOwnership>
<natureOfOwnership><value>See Footnote 1</value>
<footnoteId id="F1"></footnoteId>
</natureOfOwnership>
</ownershipNature>
</nonDerivativeSecurity>
<footnotes><footnote id="F1">Footnote 1: Held by PARock Limited Partnership of which the Reporting Person is a general partner.  The Reporting Person disclaims beneficial ownership in excess of his partnership interest.</footnote>
</footnotes>
<ownerSignature><signatureName>David Elliman</signatureName>
<signatureDate>2003-07-09</signatureDate>
</ownerSignature>
</ownershipDocument>

