Sentence understanding scores for patients with cochlear implants (CIs) when tested in quiet are relatively high. However, sentence understanding scores for patients with CIs plummet with the addition of noise. To assess, for patients with CIs (MED-EL), (1) the value to speech understanding of two new, noise-reducing microphone settings and (2) the effect of the microphone settings on sound source localization. Single-subject, repeated measures design. For tests of speech understanding, repeated measures on (1) number of CIs (one, two), (2) microphone type (omni, natural, adaptive beamformer), and (3) type of noise (restaurant, cocktail party). For sound source localization, repeated measures on type of signal (low-pass [LP], high-pass [HP], broadband noise). Ten listeners, ranging in age from 48 to 83 yr (mean = 57 yr), participated in this prospective study. Speech understanding was assessed in two noise environments using monaural and bilateral CIs fit with three microphone types. Sound source localization was assessed using three microphone types. In Experiment 1, sentence understanding scores (in terms of percent words correct) were obtained in quiet and in noise. For each patient, noise was first added to the signal to drive performance off of the ceiling in the bilateral CI-omni microphone condition. The other conditions were then administered at that signal-to-noise ratio in quasi-random order. In Experiment 2, sound source localization accuracy was assessed for three signal types using a 13-loudspeaker array over a 180° arc. The dependent measure was root-mean-score error. Both the natural and adaptive microphone settings significantly improved speech understanding in the two noise environments. The magnitude of the improvement varied between 16 and 19 percentage points for tests conducted in the restaurant environment and between 19 and 36 percentage points for tests conducted in the cocktail party environment. In the restaurant and cocktail party environments, both the natural and adaptive settings, when implemented on a single CI, allowed scores that were as good as, or better, than scores in the bilateral omni test condition. Sound source localization accuracy was unaltered by either the natural or adaptive settings for LP, HP, or wideband noise stimuli. The data support the use of the natural microphone setting as a default setting. The natural setting (1) provides better speech understanding in noise than the omni setting, (2) does not impair sound source localization, and (3) retains low-frequency sensitivity to signals from the rear. Moreover, bilateral CIs equipped with adaptive beamforming technology can engender speech understanding scores in noise that fall only a little short of scores for a single CI in quiet.