In this paper, we propose an adaptive compensation algorithm to compensate cell delay variation (CDV) occurring during ATM/TDMA transition in a satellite ATM network. The proposed CDV compensation algorithm uses two types of additional information: cell position information (Cp)--indicating the number of cells (N) arriving within a control unit time (Tc) and positions of cells at a given time--and the number of cells in bursts--to take into account the characteristics of localized bursts. To evaluate the performance of the proposed algorithm, we performed a computer simulation based on an OPNET environment, using the Markov modulated Poisson process (MMPP) traffic model and assessed its effectiveness from varied standpoints. The results of the performance testing indicate that the proposed algorithm, while requiring significantly less additional information than previous CDV compensation algorithms, is able to more efficiently compensate CDV in localized burst traffic than the previous ones.