The wideband RF receiver in a software-defined radio (SDR) system suffers from the nonlinear effects caused by the front-end analog processing. In the presence of strong blocker (interference) signals, such nonlinearities introduce severe cross modulation over the desired signals. This paper investigates how the cross-modulation distortion can be compensated for by using digital signal processing techniques. In the proposed solution, the SDR scans the wide spectrum and locates the desired signal and strong blocker signals. After down-converting these signals separately to the baseband, the baseband processor processes them jointly to mitigate the cross-modulation interferences. As a result, the sensitivity of the wideband RF receiver to the nonlinearity impairment can be significantly lowered, simplifying the RF and analog circuitry design in terms of implementation cost and power consumption. The proposed approach also demonstrates how mixed-signal, i.e., joint analog and digital, processing techniques play a critical role in the emerging SDR and cognitive radio technologies.