The cortical mechanisms underlying human speech perception in acoustically adverse conditions remain largely unknown. Besides distortions from external sources, degradation of the acoustic structure of the sound itself poses further demands on perceptual mechanisms. We conducted a magnetoencephalography (MEG) study to reveal whether the perceptual differences between these distortions are reflected in cortically generated auditory evoked fields (AEFs). To mimic the degradation of the internal structure of sound and external distortion, we degraded speech sounds by reducing the amplitude resolution of the signal waveform and by using additive noise, respectively. Since both distortion types increase the relative strength of high frequencies in the signal spectrum, we also used versions of the stimuli which were low-pass filtered to match the tilted spectral envelope of the undistorted speech sound. This enabled us to examine whether the changes in the overall spectral shape of the stimuli affect the AEFs. We found that the auditory N1m response was substantially enhanced as the amplitude resolution was reduced. In contrast, the N1m was insensitive to distorted speech with additive noise. Changing the spectral envelope had no effect on the N1m. We propose that the observed amplitude enhancements are due to an increase in noisy spectral harmonics produced by the reduction of the amplitude resolution, which activates the periodicity-sensitive neuronal populations participating in pitch extraction processes. The current findings suggest that the auditory cortex processes speech sounds in a differential manner when the internal structure of sound is degraded compared with the speech distorted by external noise.