Normal‐hearing listeners with hearing losses simulated by masking noise benefit from wideband amplitude compression under conditions (e.g. no interference, most‐comfortable presentation level) for which listeners with sensorineural hearing impairments do not. Such findings suggest that speech intelligibility may be limited by degraded spectral and temporal resolution as well as reduced dynamic range for hearing‐impaired listeners. To combat the combination of reduced dynamic range and reduced frequency selectivity, we have developed a speech‐processing system which provides both widehand compression and a sharpening of short‐term spectral shape. The sharpening is accomplished by an orthogonal decomposition of the critical‐band spectrum (similar to a principal‐component decomposition) followed by expansion of the component weights which specify the peak‐valley structure of the spectrum. We compare speech intelligibility with this system to that with linear amplification and wideband compression alone for hearing‐impaired listeners. Preliminary results for CVC nonsense syllables indicate a modest benefit for the compression/sharpening system for a male speaker, but little benefit for a female speaker. [Work supported by NIH.]