In normal-hearing listeners acoustic masking occurs depending on frequency, amplitude, and energy of specific signals. If the selection of stimulated channels in cochlear implant systems was based on psychoacoustic masking models, the bandwidth of the electrode/nerve interface could be used more effectively by concentrating on relevant signal components and neglecting those that are usually not perceived by normal hearing listeners. Subsequently, a new strategy called PACE (Psychoacoustic Advanced Combination Encoder) has been developed which uses a psychoacoustic model for the channel selection instead of the simple maxima selection algorithm of the ACE strategy. Only subjects having at least 2 years experience with the ACE strategy were included. A counterbalanced cross-over design was used to compare the new speech coding strategy with the ACE strategy. The investigation was a prospective, within-subject, repeated-measures experiment. The study group consisted of 10 postlingually deafened adult subjects. The following programs were evaluated: (1) ACE with 8 maxima selected; (2) PACE with 8 channels selected; and (3) PACE with 4 channels selected. Speech perception tests in quiet and noise, Quality Assessment Questionnaire. Results indicate a trend towards better performance with PACE. Scores in the Freiburg monosyllabic word test increased by 8% while the SNR50 in the Oldenburger sentence test improved significantly by 1.3 dB. The use of psychoacoustic masking models in speech coding strategies has the potential to improve speech perception performance in cochlear implant subjects.