In this paper, a physical and perceptual evaluation of two adaptive noise reduction algorithms for dual-microphone hearing aids are described. This is the first comparison between a fixed directional microphone on the one hand, and an adaptive directional microphone and an adaptive beamformer on the other hand, all implemented in the same digital hearing aid. The adaptive directional microphone is state-of-the-art in most modern commercial hearing aids. The physical evaluation shows the importance of an individual calibration procedure for the performance of the noise reduction algorithms with two microphone hearing aids. The directivity index calculated in anechoic conditions and intelligibility-weighted polar diagrams measured in reverberant conditions show that all the noise reduction strategies yield an improved signal-to-noise ratio (SNR), but that the adaptive beamformer generally performs best. From the perceptual evaluation, it is demonstrated that the adaptive beamformer always performs best in single noise source scenarios. In a more complex noise scenario, there is still a SNR improvement with all the techniques, however the effect is the same for all the strategies. (C) 2006 Elsevier B.V. All rights reserved.