A digital-to-analog converter (DAC) is a device that converts digital data into an analog signal   that is either a voltage, current or electrical charge. The digital data is usually a sequence of finite time impulses that gets processed and converted to a continual physical analog signal. The resolution, sampling rate and linearity are key performance parameters that describe the quality of the DAC. Resolution refers to the number of digital bits per sample that can be accurately converted to an analog signal. Sampling rate is the frequency at which the input digital data is sampled. Linearity, which is related to resolution, describes how uniformly the DAC responds to incremental digital input changes. Differential non-linearity (DNL) and integral non-linearity (INL) are typically used to characterize the DAC's linearity.

There are many different types of DACs with the ladder of resistors being the simplest. The resistor network forms a weighted average of all the digital input bits; the most significant bit (MSB) of the digital input word is given the most weight while the least significant bit (LSB) is given the least. A first-order sigma-delta DAC uses only digital logic to produce an oversampled single bit output that could be low-pass filtered to reveal the desired analog waveform. DACs require a reconstruction filter to filter out aliasing terms caused by rectangular piecewise constant steps occurring at the sample rate. A low pass filter smoothens these steps and attenuates aliasing terms.

Many DACs incorporate application specific functionality and may be supplier specific by design. An example of this are G.711 Codecs that incorporate u-law conversion – a method of encoding data that sacrifices linearity for dynamic range. These expand 8 bit companded audio bandwidth data carried on digital telephone circuits into a voltage with the original dynamic range. Another example is a TxDAC. These pass digital data through integrated interpolation FIR Filters to increase the sample rate so as to reduce the requirements on the analog anti-aliasing filter. They also incorporate interleaved quadrature I/Q channels and output current rather than voltage.