For years, vibration analysis has been the industry standard for bearing fault diagnosis. However, due to the various advantages over vibration based techniques, the quantification of acoustic emission (AE) for bearing health diagnosis has been an area of interest for recent years. Additionally, most AE based methodologies to date utilize data mining technologies. Presented in this paper is a new approach, combining a heterodyne based frequency reduction technique, time synchronous resampling, and spectral averaging to process AE signals and compute condition indicators (CIs) for bearing fault diagnostics. First, the heterodyne based frequency reduction technique allows the AE signal frequency to be down shifted from several MHz to less than 50 kHz, which approaches that of vibration based methodologies. Next, the sampled AE signals are band pass filtered to retain the useful information related to the bearing defects. Last, a trigger signal is utilized to time synchronously resample the AE signals to allow the calculation of a spectral average and the extraction and evaluation of CIs for bearing fault diagnosis. The technique presented in this paper is validated using the AE signals of seeded fault steel bearings on a bearing test rig. Presented is an effective AE based approach validated to diagnose all four fault types: inner race, outer race, ball, and cage. Moreover, the effectiveness of the presented approach is established through the comparison of both AE and vibration data.