A sidetone circuit (44) is connected to the terminals of a two-line telephone system. The sidetone circuit (44) receives inputs from a DTMF source (62) and a microphone (72). These inputs are selectively passed through a circuit (82) to produce a modulating signal which controls a current source (46) and a current (54). The current source (46) is connected between the telephone line terminals. The input audio signal from the microphone (72) modulates the current source (46) to impress a voltage upon the telephone line. The current source (54) is connected between a first of the telephone lines and a balance node (60). A resistor (58) is connected between the balance node and the second of the telephone lines. An incoming audio signal over the telephone line is coupled to the balance node (60) for summing with an inverted audio signal. The input audio signal from the microphone (72) is further coupled to the balance node (60). The inverted subscriber audio signal serves to attenuate the noninverted subscriber audio signal. The resulting signal at the balance node (60) is coupled through a capacitor (120) to an amplifier (88) for driving an output speaker (104). As a result of this circuit configuration the incoming audio signal has a minimum attenuation while a maximum amplitude signal is applied to the telephone line and a controlled sidetone signal is returned to the subscriber's speaker (104).