The present study investigates how diotic and dichotic masked thresholds, in a notched-noise masking paradigm, are affected by activation of the Medial OlivoCochlear (MOC) reflex. Thresholds were obtained for a 500-Hz pure tone diotic or a dichotic signal, S (S0 or Sπ respectively), in the presence of a simultaneous or forward diotic masker (bandpass noise with no notch or a 400-Hz notch). A diotic precursor sound (bandpass noise with a 400- or 800-Hz notch) was presented prior to the signal and masker to activate the MOC reflex. For simultaneous- and forward-masking conditions, the decrease in masked thresholds as a notch was introduced in the masker was larger for the diotic than for the dichotic condition. This resulted in a reduced binaural masking level difference (BMLD) for the masker with a notch. The precursor augmented these two effects. The results indicate that the effect of the precursor, eliciting the MOC reflex, is less pronounced when binaural cues are processed.