The stray current of direct current (DC) railway systems causes magnetic disturbance in geomagnetic measurements, which may complicate the identification of useful information. The magnetic disturbance exhibits broadband characteristics in the frequency domain. In this paper, we propose a noise reduction method based on the adaptive Kalman filter to extract useful signals from the geomagnetic data with a high level of noise. The covariance matrixes of both the process noise (Q) and measurement noise (R) can be adaptively estimated to improve the performance of the adaptive Kalman filter. The proposed method is adopted to process the geomagnetic data collected at the Beijing Geomagnetic Observatory (BJI), which is affected by the DC railway system. The magnetic disturbance is largely reduced, and the signal-to-noise ratios of the horizontal and vertical components of the geomagnetic field are improved by more than 14 dB and 27 dB, respectively. The K-indices are calculated to evaluate the performance of the adaptive Kalman filter method. To assess the influence of the adaptive Kalman filter on natural signals, the geomagnetic data that contain rapid variations are processed. The denoising results show that the adaptive Kalman filter can effectively reduce the magnetic disturbance caused by DC railway system without large impact on the natural geomagnetic rapid variations.