This paper shows that loanword adaptation can be understood entirely in terms of phonological and phonetic comprehension and production mechanisms in the first language. It provides explicit accounts of several loanword adaptation phenomena (in Korean) in terms of an Optimality-Theoretic grammar model with the same three levels of representation that are needed to describe L1 phonology: the underlying form, the phonological surface form, and the auditory-phonetic form. The model is bidirectional, i.e. the same constraints and rankings are used by the listener and by the speaker. These constraints and rankings are the same for L1 processing and loanword adaptation.