The purpose of this study was to evaluate the effect of Automatic Gain Control (AGC) on the speech perception of hearing-impaired listeners with varying degrees of reduced dynamic range. Linearly amplified and AGC recordings of the CUNY-Nonsense Syllable Test (CUNY-NST) were constructed in quiet and in noise. They were presented to 30 subjects with flat to gradually sloping sensorineural hearing loss separated into three groups of ten by mean width of dynamic range for puretones. Analysis of the CUNY-NST scores revealed that: (1) AGC significantly improved speech perception in quiet for the subjects with narrower dynamic ranges; (2) the improvement in speech perception with AGC in quiet was dependent upon the manner of articulation of the stimulus; (3) consonant confusions in quiet for AGC were more often due to place errors compared to the linear condition which may be a reflection of a reduction in distinctive feature errors; and (4) linear amplification resulted in higher CUNY-NST scores than did AGC in the presence of background noise.