A mobile device includes at least one speaker and an audio subsystem for providing an audio signal to the at least one speaker for playback by the at least one speaker. The audio subsystem operates by detecting a distance to a user of the mobile device using a proximity sensor and controlling volume output of the at least one speaker based on the distance to the user of the mobile device and the operational status of the proximity sensor. If it is determined that the proximity sensor is functional, the audio subsystem applies a gain factor to the audio signal that varies based on the distance to the user or limits the maximum allowable speaker output based on the distance. A high or low gain setting may be applied for when the user is far away or in close proximity to the mobile device.