We have developed an efficient isospin projection method in the shell model Monte Carlo approach for isospin-conserving Hamiltonians. For isoscalar observables this projection method has the advantage of being exact sample by sample. The isospin projection method allows us to take into account the proper isospin dependence of the nuclear interaction, thus avoiding a sign problem that such an interaction introduces in unprojected calculations. We apply our method in the calculation of the isospin dependence of level densities in the complete $pf+g_{9/2}$ shell. We find that isospin-dependent corrections to the total level density are particularly important for $N \sim Z$ nuclei.
