Performance-based maintenance of machinery relies on detection and prediction of performance degradation. Degradation indicators calculated from process measurements need to be approximated with degradation models that smooth the variations in the measurements and give predictions of future values of the indicator. Existing models for performance degradation assume that the performance monotonically decreases with time. In consequence, the models yield suboptimal performance in performance-based maintenance as they do not take into account that performance degradation can reverse itself. For instance, deposits on the blades of a turbomachine can be self-cleaning in some conditions. In this study, a data-driven algorithm is proposed that detects if the performance degradation indicator is increasing or decreasing and adapts the model accordingly. A moving window approach is combined with adaptive regression analysis of operating data to predict the expected value of the performance degradation indicator and to quantify the uncertainty of predictions. The algorithm is tested on industrial performance degradation data from two independent offshore applications, and compared with four other approaches. The parameters of the algorithm are discussed and recommendations on the optimal choices are made. The algorithm proved to be portable and the results are promising for improving performance-based maintenance.