A physical layer and a physical layer diagnostic system allow the physical layer of a network device to be tested without requiring the physical layer to be connected to a medium access controller. The physical layer includes a medium-side interface. A plurality of digital circuits in the physical layer communicate with the medium-side interface. A medium communicates with the medium-side interface. A packet generating device is connected to the medium and generates data packets that are transmitted over the medium to the medium-side interface, through the plurality of digital circuits of the physical layer and back to the packet generating device.