Twelve schizophrenic subjects with acoustic hallucinations in their case histories were compared with 12 healthy reference subjects and eight subjects with panic disorder in a test of three auditory masking tasks, simultaneous masking (SM), forward masking (FM) and backward masking (BM). The schizophrenic subjects showed no differences from reference subjects on SM but had higher thresholds for the two other conditions (FM and BM). Schizophrenics with very increased thresholds (n=6) had a significantly higher need for residential treatment. Thresholds for SM and BM were not, as for reference subjects, related to age for schizophrenics. No statistically significant differences regarding any masking experiments were found between the panic disorder subjects and the reference subjects. Simultaneous masking, reflecting functions of the basilar membrane and those of elementary brainstem processing, showed no signs of dysfunction in schizophrenic subjects. Schizophrenics showed aberrations in FM and BM, possibly influenced by more central (cortical) processes.