A digital hearing aid according to the present invention is capable of measuring its own performance. The measurement and initialization capability may be entirely integral to the hearing aid, or an external processor may be used to download the measurement program and the run time program, and assist in computing the parameters. The hearing aid includes a test signal generator for feeding a test signal into the hearing aid amplifier. The response to the test signal is acquired at a specific point in the hearing aid, depending upon what aspect of performance is to be measured. Various elements of the hearing aid and/or the hearing aid feedback may be bypassed. The hearing aid further includes the capability of initializing hearing aid parameters based upon the performance measurements.