Purpose: The purpose of the study was to evaluate the effect of different gradations of noise reduction (NR) algorithm in hearing aids, through acoustical and perceptual measures.Methods: The output of the hearing aid with NR at three gradations (minimum, medium and maximum) and without NR, at 0 dB signal to noise ratio (SNR) across three types of noise (cafeteria, speech babble, and traffic noise) was recorded. The effect of noise reduction was quantified through objective and subjective measures.Results: In noise alone condition, the maximum gain reduction was seen for the traffic noise followed by cafeteria noise and speech babble. In the speech in noise condition, the maximum improvement in the output SNR was seen only for cafeteria noise and traffic noise. However, the NR gradation did not have much impact on speech babble. The Perceptual Evaluation of Speech Quality results revealed that the mean opinion scores were similar across the NR 'on' and NR 'off' positions. However, Envelope Detection Index values for maximum NR gradation was better than medium and minimum gradation for cafeteria noise and traffic noise. Hence, it was seen that the effectiveness of NR depended on the type of noise. The subjective quality judgment tasks were also in coherence with the objective measures.Conclusion: When NR was set to maximum, it could aid in reducing the noisiness and improving the overall quality of the signal for cafeteria and traffic noise.