This is what I did to solve my problem:

Open the terminal and type:



Thanks to wawa at ubuntuforums.org for providing this solution. Here is the relevant thread.

Apparently some time ago I set up dmix in my Alsa configuration, and that was messing things up. Here is how my old /etc/asound.conf file looked:



Best of luck to those with this problem! Skype audio works great for me now.

Problem in above config is that 'dmix' is designed for output only, so does not route microphone.
If there is need to use dmix for software mixing, more advanced configuration must be created.

I have some examples here:
http://juljas.net/linux/skype/alsa-configu...software_mixing

Thanks for posting those examples! I have no idea what dmix is even helpful for, but it's good to know I can switch back to it if I need to.

Dmix is useful for those sound cards that cannot do hardware mixing.
It means that you cannot playback from two sources in the same time (eg. Skype & xmms), so one needs to wait until the other release the device.
This is especially frustrating on applications that play some notifications sounds, and you cannot hear them, since you are listening to mp3 or so.

Dmix is a software mixer that merge multiple sound streams into one, and sends it to the sound card.