A receiver (100) includes an audio section (200) which provides for compensated squelch settings which are automatically adjustable for changes in operating conditions such as changes in temperature or receiver channel spacing. Temperature circuit (128) provides a temperature signal (134) and controller (122) provides a signal indicating the channel spacing being used by receiver (100). The two signals are combined and formed into an address word which is in turn used to look-up a compensation word from memory location (218). The compensation word is then combined to a default squelch word by adder (216) providing for a compensated squelch word. The compensated squelch word automatically adjusts the squelch circuit's threshold level in order to compensate for changes in operational conditions affecting the squelch circuit.