Objectives Hearing aids are frequently used in reverberant environments; however, relatively little is known about how reverberation affects the processing of signals by modern hearing aid algorithms. The purpose of this study was to investigate the acoustic and behavioral effects of reverberation and wide-dynamic range compression (WDRC) in hearing aids on consonant identification for individuals with hearing impairment. Design Twenty-three listeners with mild to moderate sloping sensorineural hearing loss were tested monaurally under varying degrees of reverberation and WDRC conditions. Listeners identified consonants embedded within vowel-consonant-vowel nonsense syllables. Stimuli were processed to simulate a range of realistic reverberation times and WDRC release times using virtual acoustic simulations. Additionally, the effects of these processing conditions were acoustically analyzed using a model of envelope distortion to examine the effects on the temporal envelope. Results Aided consonant identification significantly decreased as reverberation time increased. Consonant identification was also significantly affected by WDRC release time. This relationship was such that individuals tended to perform significantly better with longer release times. There was no significant interaction between reverberation and WDRC. The application of the acoustic model to the processed signal showed a close relationship between trends in the behavioral performance and distortion to the temporal envelope resulting from reverberation and WDRC. The results of the acoustic model demonstrated the same trends found in the behavioral data for both reverberation and WDRC. Conclusions Reverberation and WDRC release time both affect aided consonant identification for individuals with hearing impairment, and these condition effects are associated with alterations to the temporal envelope. There was no significant interaction between reverberation and WDRC release time.