A method and system for evaluating performance of a device by on-chip determination of BER may include establishing and generating PRBS test packets in a closed communication path internally within a physical layer device (PLD) and a remote PLD. A BER for the PLD may be determined from within the PLD based on a comparison of at least a portion of the generated test packets with at least a portion of the generated test packets transmitted over the closed communication path received by the PLD via the closed communication path from the remote PLD. A transmit path of the PLD may be internally coupled to a receive path of the PLD, and a receive path of the PLD may be internally coupled to a transmit path of the PLD. The PLD may be internally configured to operate in an internal optical loopback mode or an internal electrical loopback mode.