Using a "noise-vocoder" cochlear implant simulator [Shannon et al., Science 270, 303-304 (1995)], the effect of the speed of dynamic range compression on speech intelligibility was assessed, using normal-hearing subjects. The target speech had a level 5 dB above that of the competing speech. Initially, baseline performance was measured with no compression active, using between 4 and 16 processing channels. Then, performance was measured using a fast-acting compressor and a slow-acting compressor, each operating prior to the vocoder simulation. The fast system produced significant gain variation over syllabic timescales. The slow system produced significant gain variation only over the timescale of sentences. With no compression active, about six channels were necessary to achieve 50% correct identification of words in sentences. Sixteen channels produced near-maximum performance. Slow-acting compression produced no significant degradation relative to the baseline. However, fast-acting compression consistently reduced performance relative to that for the baseline, over a wide range of performance levels. It is suggested that fast-acting compression degrades performance for two reasons: (1) because it introduces correlated fluctuations in amplitude in different frequency bands, which tends to produce perceptual fusion of the target and background sounds and (2) because it reduces amplitude modulation depth and intensity contrasts.