Telephone handsets have a built-in side-tone feedback because the transmitter feeds back sound through the receiver, allowing users to monitor their voice levels. However, the side-tone feedback system also picks up background noise which interferes with the incoming speech signal. This study investigated the influence of side-tone feedback on the telephone listening ability of 30 normal-hearing subjects in a background of multitalker (MT) and white noise (WN) presented at 65, 75, and 85 dB SPL in two conditions where the side-tone feedback was present and in three conditions where the side-tone was eliminated. Telephone listening ability significantly decreased as the level of the noise increased for both MT and WN and for all listening conditions. Telephone listening ability was significantly poorer in the background of MT than WN for each noise level and listening condition. The primary finding was that telephone listening ability in a background of MT or WN at the higher levels was significantly improved when the side-tone feedback was eliminated by electronically disengaging or more simply by occluding the transmitter with the palm of the hand.