We analyze signal detection with nonlinear test statistics in the presence of colored noise. In the limits of small signal and weak noise correlation, the optimal test statistic and its performance are derived under general conditions, especially concerning the type of noise. We also analyze, for a threshold nonlinearity-a key component of a neural model, the conditions for noise-enhanced performance, establishing that colored noise is superior to white noise for detection. For a parallel array of nonlinear elements, approximating neurons, we demonstrate even broader conditions allowing noise-enhanced detection, via a form of suprathreshold stochastic resonance.