We propose a simultaneous noise filtering and phase unwrapping algorithm. Spatial evolution of phase is modeled as an autoregressive Gaussian Markov random field. Accordingly, phase value at a pixel is related to phase values at surrounding pixels in a probabilistic manner. The problem of estimation of these probabilities is formulated as state space analysis using the wrapped Kalman filter. Simulation and experimental results demonstrate the practical applicability of the proposed phase unwrapping algorithm.