Java-DSP is a freely accessible web-based software, primarily used in signal processing education and research. In this paper, we present Java-DSP modules that have been developed for the study and analysis of the MPEG-1 Layer III algorithm. We have embedded JLayer1.0, an open source MP3 library, to Java-DSP and developed an intuitive interface to expose undergraduate and graduate students to the several modules in the encoding/decoding process. The Java-DSP MP3 decoder block is an interactive function which can be used to examine the characteristics and visualize outputs of different modules in the algorithm. Some of the important functions incorporated in the proposed interface include the analysis of the hybrid filter bank, polyphase filters and the window switching based on perceptual criteria. The MP3 algorithm represents a compelling framework for teaching certain aspects in DSP. We are using this module to introduce filter banks and windowing to undergraduate students.