In a previous study with normal-hearing listeners, we evaluated consonant identification masked by two or more spectrally contiguous bands of noise, with asynchronous square-wave modulation applied to neighboring bands. Speech recognition thresholds were 5.1-8.5 dB better when neighboring bands were presented to different ears (dichotic) than when all bands were presented to one ear (monaural), depending on the spectral width of the frequency bands. This dichotic advantage was interpreted as reflecting masking release from peripheral spread of masking from neighboring frequency bands. The present study evaluated this effect in listeners with sensorineural hearing loss, a population more susceptible to spread of masking. Speech perception (vowel-consonant-vowel stimuli, as in /aBa/) was measured in the presence of fluctuating noise that was either modulated synchronously across frequency or asynchronously. Hearing-impaired listeners (n = 9) and normal-hearing controls were tested at either the same intensity (n = 7) or same sensation level (n = 8). Hearing-impaired listeners had mild-to-moderate hearing loss and symmetrical, flat audiometric thresholds. While all groups of listeners performed better in the dichotic than monaural condition, this effect was smaller for the hearing-impaired (3.5 dB) and equivalent-sensation-level controls (3.3 dB) than controls tested at the same intensity (11.0 dB). The present study is consistent with the idea that dichotic presentation can improve speech-in-noise listening for hearing-impaired listeners, and may be enhanced when combined with amplification.