The present invention is directed to an apparatus and method for digital-mixing two sound sources, and performing both audio-outputting and encoding-storing of the digital-mixed sound sources. The digital audio player of the present invention includes: an analog-to-digital converter for converting an analog audio signal input through an audio signal input unit to a digital audio signal; a memory for storing a compressed digital audio signal; a mixer for digital-mixing the digital audio signal output from the analog-to-digital converter with a decoded digital music signal from the memory; a digital-to-analog signal converter for converting the digital signal output from the mixer to an analog signal and sending the analog signal to an audio output unit; and a central processing unit for generating a control signal for reading out compressed music data from the memory, decoding the music data, sending the decoded music data to the mixer, encoding the mixed digital signal from the mixer, and then storing the encoded digital signal in the memory. The digital audio playing method uses the digital audio player to perform both encoding and decoding, thereby mixing digital audio signals and realizing both audio-outputting and memory-storing of the digital-mixed audio signals.