The current study examined auditory processing deficits in dyslexia using a dichotic pitch stimulus and functional MRI. Cortical activation by the dichotic pitch task occurred in bilateral Heschl's gyri, right planum temporale, and right superior temporal sulcus. Adolescents with dyslexia, relative to age-matched controls, illustrated greater activity in left Heschl's gyrus for random noise, less activity in right Heschl's gyrus for all auditory conditions, and less activity in right superior temporal sulcus for a dichotic melody. Subsequent analyses showed that these group differences were attributable to dyslexic readers who performed poorly on the psychophysical task. Furthermore, behavioral performance on phonological reading was correlated to activity from dichotic conditions in right Heschl's gyrus and right superior temporal sulcus. It is postulated that these differences between reader groups is primarily due to a noise exclusion deficit shown previously in dyslexia. (Contains 2 tables and 3 figures.)