A method for processing a digital signal produced by digitizing an analog signal such as a musical instrument sound signal, and an apparatus for producing sound source data. When the input signal contains a periodically repetitive wave form portion, the fundamental frequency and its high harmonic components of the input signal is extracted by a comb filter prior to signal processing which takes advantage of the periodicity of the input signal. The fundamental frequency or pitch is detected by performing Fourier transform to produce frequency components, phase matching these frequency components and performing inverse Fourier transform. When extracting a repetitive waveform portion or so-called looping domain, such looping domain having the highest similarity in waveform in the vicinity of both ends of the domain is selected. When the bit compression of digital signal data is performed by selecting a filter with blocks each consisting of plural samples as units, a pseudo signal is affixed to the input signal, before the start point of the input signal, which pseudo signal will cause a filter of the lowest order to be selected. The looping domain is set so as to be a whole number multiple of the block which serves as the unit for bit compression, and the parameters of the looping start block are formed on the basis of data of the start and the end blocks. By applying a part or the whole of the signal processing method to a sound source data forming apparatus, sound source data may be formed which is reduced in the looping noise and error caused by data compression and which is of superior sound quality.