This study investigated the effects of reverberation upon the speech discrimination performance of 30 normally hearing subjects and 30 persons with bilateral sensorineural hearing loss. Following preliminary tests, the Modified Rhyme Test was administered monaurally and binaurally at reverberation times of 0, 1, 2 and 3 sec. All stimuli were administered under earphones. The lists and conditions were appropriately randomized and counterbalanced so that each subject heard a test list at each reverberation time (RT) monaurally and binaurally. The expected gain due to binaural summation of loudness was simulated in order to test the possibility that any binaural enhancement of intelligibility might be due to binaural loudness summation. For all conditions, the normally hearing subjects performed significantly better than the hearing-impaired group. However, in relative terms, the two groups were remarkably similar. Binaural scores were significantly higher than monaural scores at each RT for both groups (in spite of homophasic conditions). For both groups, monaural and binaural scores decreased with increasing RT. Monaural scores decreased at a significantly faster rate with RT than did the binaural scores (the binaural advantage, however, was larger for the normal group). Increasing the monaural presentation levels to simulate the binaural loudness gain did not result in higher scores. It was concluded that speech discrimination under reverberation is better binaurally than monaurally for both normally hearing and hearing-impaired persons. This is due, at least partly, to the ability of the binaural auditory system to squelch the effects of reverberation. A tentative model is suggested for the binaural squelch of reverberation. The current findings are compared with existing data; and suggestions are offered for clinical application.