The perceptual consequences of expanding the amplitude variations in speech were studied under conditions in which spectral information was obscured by signal correlated noise that had an envelope correlated with the speech envelope, but had a flat amplitude spectrum. The noise samples, created individually from 22 vowel-consonant-vowel nonsense words, were used as maskers of those words, with signal-to-noise ratios ranging from -15 to 0 dB. Amplitude expansion was by a factor of 3.0 in terms of decibels. In the first experiment, presentation level for speech peaks was 80 dB SPL. Consonant recognition performance for expanded speech by 50 listeners with normal hearing was as much as 30 percentage points poorer than for unexpanded speech and the types of errors were dramatically different, especially in the midrange of S-N ratios. In a second experiment presentation level was varied to determine whether reductions in consonant levels produced by expansion were responsible for the differences between conditions. Recognition performance for unexpanded speech at 40 dB SPL was nearly equivalent to that for expanded speech at 80 dB SPL. The error patterns obtained in these two conditions were different, suggesting that the differences between conditions in Experiment 1 were due largely to expanded amplitude envelopes rather than differences in audibility.