An Audio Caller ID service is provided which permits the calling party to speak a real time audio message that can be received and played by the called party's Caller ID equipment while his telephone equipment remains in the "on-hook" state. A calling party which has Audio Caller ID (ACID) service would speak a short audio message before dialing the called party. That message is converted to digital form, optionally compressed, and transferred to the called party in a manner similar to conventional Caller ID information. The called party's Caller ID equipment operates in the conventional manner, except that the received Audio Caller ID signal is recognized as an audio signal. At the site of the called party, a decoder is provided to convert the digital signal to an analog audio signal, and this analog signal is provided to a speaker, which plays back the calling party's audio message.