The Chiefs have won their last three games and are second in the Premiership, having beaten fourth-placed Leicester 19-6 on Saturday.
"Our defence has taken a step up or two this season," Baxter said.
"Our organisation, our work rate and our the physicality of our defence is really what's knocked up a notch," he added to BBC Radio Devon.
Exeter have only conceded two tries in four Premiership games this season and have not let a side score in their last two encounters.
"I think the guys really trust it," added Baxter, whose side face a trip to Ospreys in the European Champions Cup on Sunday.
"We weren't always perfect, we got found out a couple of times and they got round us with some width a few times, but that it is the weakness of our defence because we tend to go forward and try to get people when they've got the ball.
"Fair play to Leicester, they hurt us a little bit. But we stuck to our guns, the set piece going well was a key factor, and other than that we worked extremely hard and as the game broke up we were probably unfortunate not to score more points."
Exeter head coach Rob Baxter says his side's improved defence is behind the club's recent good form.