Performance for a variety of visual tasks improves with practice. The purpose of this study was to determine the nature of the processes underlying perceptual learning of identifying letters in peripheral vision. To do so, we tracked changes in contrast thresholds for identifying single letters presented at 10 degrees in the inferior visual field, over a period of six consecutive days. The letters (26 lowercase Times-Roman letters, subtending 1.7 degrees) were embedded within static two-dimensional Gaussian luminance noise, with rms contrast ranging from 0% (no noise) to 20%. We also measured the observers' response consistency using a double-pass method on days 1, 3 and 6, by testing two additional blocks on each of these days at luminance noise of 3% and 20%. These additional blocks were the exact replicates of the corresponding block at the same noise contrast that was tested on the same day. We analyzed our results using both the linear amplifier model (LAM) and the perceptual template model (PTM). Our results showed that following six days of training, the overall reduction (improvement across all noise levels) in contrast threshold for our seven observers averaged 21.6% (range: 17.2-31%). Despite fundamental differences between LAM and PTM, both models show that learning leads to an improvement of the perceptual template (filter) such that the template is more capable of extracting the crucial information from the signal. Results from both the PTM analysis and the double-pass experiment imply that the stimulus-dependent component of the internal noise does not change with learning.