This paper describes the structure and performance of a new signal processing scheme, motivated by the physiology of the peripheral auditory system, that improves speech recognition accuracy in the presence of broadband noise. An important attribute of the peripheral processing is a novel mechanism to represent the cycle-by-cycle synchrony in the response of low-frequency auditory-nerve fibers, in addition to the more conventional processing based on mean rate of response. It is shown that the use of the physiologically-motivated peripheral processing improves recognition accuracy in the presence of both broadband and transient noise, and that the use of the synchrony mechanism provides further improvement beyond that which is provided by the mean rate mechanism.