Psychophysical estimates of cochlear function suggest that normal-hearing listeners exhibit a compressive basilar-membrane (BM) response. Listeners with moderate to severe sensorineural hearing loss may exhibit a linearized BM response along with reduced gain, suggesting the loss of an active cochlear mechanism. This study investigated how the BM response changes with increasing hearing loss by comparing psychophysical measures of BM compression and gain for normal-hearing listeners with those for listeners who have mild to moderate sensorineural hearing loss. Data were collected from 16 normal-hearing listeners and 12 ears from 9 hearing-impaired listeners. The forward masker level required to mask a fixed low-level, 4000-Hz signal was measured as a function of the masker-signal interval using a masker frequency of either 2200 or 4000 Hz. These plots are known as temporal masking curves (TMCs). BM response functions derived from the TMCs showed a systematic reduction in gain with degree of hearing loss. Contrary to current thinking, however, no clear relationship was found between maximum compression and absolute threshold.