Purpose: Noise reduction and dynamic-range compression are generally applied together in hearing aids but may have opposite effects on amplification. This study evaluated the acoustical and perceptual effects of separate and combined processing of noise reduction and compression. Design: Recordings of the output of 4 hearing aids for speech in babble noise at +4 dB signal-to-noise ratio were used in 3 experiments: (a) acoustical measurements to determine the influence of processing on speech and noise levels; (b) perceptual measurements to determine the detectability of processing differences for 16 listeners with hearing impairment; and (c) perceptual measurements to determine the effect of processing on speech intelligibility, noise annoyance, speech naturalness, and overall preference. Results: Noise reduction and compression processing differed between hearing aids. The combined processing (noise reduction with compression) most strongly reduced noise and speech levels. The combined processing was detectably different between hearing aids, but compression processing alone was not. The combined processing did not influence speech intelligibility. Preference for combined processing was lower than previously observed for noise reduction without compression. Conclusions: Differences in processing between hearing aids are perceptually salient. The effect of compression should be taken into account during the development and evaluation of hearing aid noise reduction.