Noise-reduction methods have provided significant improvements in speech perception for cochlear implant recipients, where only quality improvements have been found in hearing aid recipients. Recent psychoacoustic studies have suggested changes to noise-reduction techniques specifically for cochlear implants, due to differences between hearing aid recipient and cochlear implant recipient hearing. An optimized noise-reduction method was developed with significantly increased temporal smoothing of the signal-to-noise ratio estimate and a more aggressive gain function compared to current noise-reduction methods. This optimized noise-reduction algorithm was tested with 12 cochlear implant recipients over four test sessions. Speech perception was assessed through speech in noise tests with three noise types; speech-weighted noise, 20-talker babble and 4-talker babble. A significant speech perception improvement using optimized noise reduction over standard processing was found in babble noise and speech-weighted noise and over a current noise-reduction method in speech-weighted noise. Speech perception in quiet was not degraded. Listening quality testing for noise annoyance and overall preference found significant improvements over the standard processing and over a current noise-reduction method in speech-weighted and babble noise types. This optimized method has shown significant speech perception and quality improvements compared to the standard processing and a current noise-reduction method.