Due to interaural frequency mismatch, bilateral cochlear-implant (CI) users may be less able to take advantage of binaural cues that normal-hearing (NH) listeners use for spatial hearing, such as interaural time differences and interaural level differences. As such, bilateral CI users have difficulty segregating competing speech even when the target and competing talkers are spatially separated. The goal of this study was to evaluate the effects of spectral resolution, tonotopic mismatch (the frequency mismatch between the acoustic center frequency assigned to CI electrode within an implanted ear relative to the expected spiral ganglion characteristic frequency), and interaural mismatch (differences in the degree of tonotopic mismatch in each ear) on speech understanding and spatial release from masking (SRM) in the presence of competing talkers in NH subjects listening to bilateral vocoder simulations. During testing, both target and masker speech were presented in five-word sentences that had the same syntax but were not necessarily meaningful. The sentences were composed of five categories in fixed order (Name, Verb, Number, Color, and Clothes), each of which had 10 items, such that multiple sentences could be generated by randomly selecting a word from each category. Speech reception thresholds (SRTs) for the target sentence presented in competing speech maskers were measured. The target speech was delivered to both ears and the two speech maskers were delivered to (1) both ears (diotic masker), or (2) different ears (dichotic masker: one delivered to the left ear and the other delivered to the right ear). Stimuli included the unprocessed speech and four 16-channel sine-vocoder simulations with different interaural mismatch (0, 1, and 2 mm). SRM was calculated as the difference between the diotic and dichotic listening conditions. With unprocessed speech, SRTs were 0.3 and -18.0 dB for the diotic and dichotic maskers, respectively. For the spectrally degraded speech with mild tonotopic mismatch and no interaural mismatch, SRTs were 5.6 and -2.0 dB for the diotic and dichotic maskers, respectively. When the tonotopic mismatch increased in both ears, SRTs worsened to 8.9 and 2.4 dB for the diotic and dichotic maskers, respectively. When the two ears had different tonotopic mismatch (e.g., there was interaural mismatch), the performance drop in SRTs was much larger for the dichotic than for the diotic masker. The largest SRM was observed with unprocessed speech (18.3 dB). With the CI simulations, SRM was significantly reduced to 7.6 dB even with mild tonotopic mismatch but no interaural mismatch; SRM was further reduced with increasing interaural mismatch. The results demonstrate that frequency resolution, tonotopic mismatch, and interaural mismatch have differential effects on speech understanding and SRM in simulation of bilateral CIs. Minimizing interaural mismatch may be critical to optimize binaural benefits and improve CI performance for competing speech, a typical listening environment. SRM (the difference in SRTs between diotic and dichotic maskers) may be a useful clinical tool to assess interaural frequency mismatch in bilateral CI users and to evaluate the benefits of optimization methods that minimize interaural mismatch.