A disk drive is disclosed comprising a disk including a plurality of servo sectors, a head actuated over the disk, the head for generating a read signal, and a gain control circuit for adjusting a gain of the read signal in response to a gain setting. A bias setting is initialized for the head, and the gain setting for the read signal is initialized. The read signal is processed to detect at least one of the servo sectors, and when at least one of the servo sectors is not detected, the gain setting is adjusted. The read signal is processed with the adjusted gain setting to detect at least one of the servo sectors, and when at least one of the servo sectors is not detected with the adjusted gain setting, the bias setting is adjusted in response to the adjusted gain setting.