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The aim of the present study is to evaluate the effects of nonlinear frequency compression (NLFC) on Mandarin speech recognition and sound quality perception. Thirty Chinese-speaking, hearing-impaired adults without hearing-aid experiences participated in the study. They were fitted bilaterally with the Phonak behind-the-ear hearing aids. Each participant was evaluated with the Phoneme Perception Test, Mandarin speech recognition, and sound quality perception at post-fitting 0, 4, and 12 weeks with NLFC-on vs. NLFC-off. The NLFC were active at home. Results show significant differences in detection of phonemes of high-frequency components (such as /sa/) between NLFC on and off. The difference between NLFC on and off was significant for consonant and sentence recognition. Duration of NLFC use had significant effects on the recognition of consonants, vowels, and sentences. Regarding the sound quality perception test, there were significant effects of NLFC conditions (on vs. off), duration of NLFC use, and sound types on the four categories of percepts (i.e., loudness, clarity, naturalness, and overall preference). Therefore, NLFC improves the audibility of high-frequency speech signals and provides better recognition of consonants and sentences and perception of sound quality. The benefit of NLFC on speech recognition and sound quality perception requires certain amount of acclimatization.