An open-ear hearing aid for compensating for loss of hearing in the human ear comprising: input means for picking up incident sound to be received by the human ear and converting it to an electrical audio signal, output means including an output transducer positionable within a human ear canal for producing a sound output in response to incident sound picked-up by said input means, said output means having a form that allows transmission of incident sound directly to the eardrum, where it combines with the sound output from said output transducer, the combination of incident sound and sound output from said output means resulting in the sound perceived by the wearer of the hearing aid, and signal processing means for processing the electrical audio signal from said input means, wherein the characteristics of the sound output from said output transducer are at least in part determined by said signal processing means, said signal processing means producing the following characteristics in the sound output that combines with incident sound: i) the sound output is amplified within a frequency band set in accordance with the user's hearing loss characteristics; ii) the gain of the amplified sound output within said frequency band is dependent on the sound pressure levels of the incident sound; and iii) the output transducer produces no sound output when the incident sound pressure level exceeds a set cut-off level, whereby the sound perceived by the wearer is entirely the result of incident sound arriving directly at the eardrum, characterized in that the cut-off level is set at the threshold of audibility of the user. input means for picking up incident sound to be received by the human ear and converting it to an electrical audio signal, output means including an output transducer positionable within a human ear canal for producing a sound output in response to incident sound picked-up by said input means, said output means having a form that allows transmission of incident sound directly to the eardrum, where it combines with the sound output from said output transducer, the combination of incident sound and sound output from said output means resulting in the sound perceived by the wearer of the hearing aid, and signal processing means for processing the electrical audio signal from said input means, wherein the characteristics of the sound output from said output transducer are at least in part determined by said signal processing means, said signal processing means producing the following characteristics in the sound output that combines with incident sound: i) the sound output is amplified within a frequency band set in accordance with the user's hearing loss characteristics; ii) the gain of the amplified sound output within said frequency band is dependent on the sound pressure levels of the incident sound; and iii) the output transducer produces no sound output when the incident sound pressure level exceeds a set cut-off level, whereby the sound perceived by the wearer is entirely the result of incident sound arriving directly at the eardrum, characterized in that the cut-off level is set at the threshold of audibility of the user. i) the sound output is amplified within a frequency band set in accordance with the user's hearing loss characteristics; ii) the gain of the amplified sound output within said frequency band is dependent on the sound pressure levels of the incident sound; and iii) the output transducer produces no sound output when the incident sound pressure level exceeds a set cut-off level, whereby the sound perceived by the wearer is entirely the result of incident sound arriving directly at the eardrum, characterized in that the cut-off level is set at the threshold of audibility of the user.