Traditional loudness models have been based on the average energy and the critical band analysis of steady-state sounds. However, most environmental sounds, including speech, are dynamic stimuli, in which the average level [e.g., the root-mean-square (rms) level] does not account for the large temporal fluctuations. The question addressed here was whether two stimuli of the same rms level but different peak levels would produce an equal loudness sensation. A modern adaptive procedure was used to replicate two classic experiments demonstrating that the sensation of “beats” in a two- or three-tone complex resulted in a louder sensation [E. Zwicker and H. Fastl,Psychoacoustics—Facts and Models(Springer-Verlag, Berlin, 1990)]. Two additional experiments were conducted to study exclusively the effects of the temporal envelope on the loudness sensation of dynamic stimuli. Loudness balance was performed by normal-hearing listeners between a white noise and a sinusoidally amplitude-modulated noise in one experiment, and by cochlear implant listeners between two harmonic stimuli of the same magnitude spectra, but different phase spectra, in the other experiment. The results from both experiments showed that, for two stimuli of the same rms level, the stimulus with greater temporal fluctuations sometimes produced a significantly louder sensation, depending on the temporal frequency and overall stimulus level. In normal-hearing listeners, the louder sensation was produced for the amplitude-modulated stimuli with modulation frequencies lower than 400 Hz, and gradually disappeared above 400 Hz, resulting in a low-pass filtering characteristic which bore some similarity to the temporal modulation transfer function. The extent to which loudness was greater was a nonmonotonic function of level in acoustic hearing and a monotonically increasingly function in electric hearing. These results suggest that the loudness sensation of a dynamic stimulus is not limited to a 100-ms temporal integration process, and may be determined jointly by a compression process in the cochlea and an expansion process in the brain. A level-dependent compression scheme that may better restore normal loudness of dynamic stimuli in hearing aids and cochlear implants is proposed.