A built-in self-test mechanism for an interface chip. During a loopback test procedure, a transmission terminal of the interface chip is coupled back to the interface chip by a reception terminal of the interface chip and a loopback test circuit within the interface chip generates a test sequence which includes a synchronization section and a section of repeated test code. The test sequence is scrambled by a scrambler and then is transmitted via the transmission terminal and looped back to the reception terminal. The signal looped back to the reception terminal is processed by an equalizer and descrambled by a descrambler to be further checked by the loopback test circuit for determining whether the interface chip is functioning normally. The dynamically-changed keys used in the scrambler and the descrambler are synchronized according to the synchronization section. The equalizer is optimized by the scrambled section of repeated test code.