Latency is "the inherent delay in signal processing as well as software processing. The time it takes for a system or device to respond to an instruction, or the time it takes for a signal to pass through a device. It is how long it takes for a result to happen from a command." (from http://www.rane.com/par-l.html#latency )

In DAW's, latency is the time it takes for audio entering a system to be processed and sent back out. This manifests itself in a number of ways:
• As a delay, or shift, in a track when recording new material alongside existing material.
• As a delay between the time you trigger a virtual instrument and the time you hear it.
• As a track being "late" when inserting a particular plugin.
• As an echo when recording and monitoring both the input and the playback.

So, how do you get rid of it? The first step is understanding why latency is present and what controls it. Latency has nothing to do with what recording software or interface hardware you use. It has everything to do with how fast your computer can process the information requested. The information we're talking about is commonly referred to as a "buffer." Buffers temporarily hold data that is being processed. Buffer sizes are almost always user-definable, meaning that you can specify how large you want that block of data to be, and in turn, how much latency you will experience.

Lower buffer sizes mean less latency, but they also mean more CPU load. Smaller buffers need to be processed faster, and so will demand more of your computer.

To put buffer sizes in perspective: At a sample rate of 44.1 kHz, a buffer size of 256 samples (a fairly common for recording) will yield a 5.8 millisecond delay. A buffer size of 1024 samples (more common while mixing) will give 23.2 ms of latency. At 96 kHz, these values drop to 2.7 ms and 10.7 ms, respectively. Now, we take into account the speed of sound: it takes about 5 ms for audio to reach your ears from speakers set 5 feet from your head. So, anything below 5 ms latency is virtually imperceptible. However, 5 ms is NOT a hard-and-fast rule; different applications will require different latencies. You will need to experiment with these sizes and find what works for you.

To adjust your buffer/latency settings, go to the following place in your DAW software. The actual setting may be controlled in your interface's control panel:

Pro Tools
Setup > playback Engine > H/W Buffer Size

Digital Performer
Setup > Configure Audio System > Configure Hardware Driver > Buffer Size

Logic
Preferences > Audio > Drivers > Core Audio > I/O Buffer Size

SONAR
Options > Audio > ASIO Panel

Live
Options > Preferences > Audio > Hardware Setup

Cubase LE
Devices > Device Setup > VST Multitrack > Control Panel

Cubase SE, SL, and SX
Devices > Device Setup > VST Audio Bay. When you choose your ASIO driver, it's name will show up below VST Audio Bay in the left-hand column. Select it there, and choose Control Panel.

ACID and Vegas
Options > Preferences > Audio Device > Advanced > Configure

Tracktion
Settings tab > latency (shows up as a slider)

There are some additional articles that are related to this topic. You can find them in our Knowledgebase by searching the article number listed.

Managing CPU Power: 30189
Managing Latency (a different look at the problem): 29484
Windows Driver Modes: 29827
PC Optimization Guide: 30058
Mac OS X Oprimization Guide: 30300