Sensory and motor skills can be improved with training, but learning is often restricted to practice stimuli. As an exception, training on closed-loop (CL) sensorimotor interfaces, such as action video games and musical instruments, can impart a broad spectrum of perceptual benefits. Here we ask whether computerized CL auditory training can enhance speech understanding in levels of background noise that approximate a crowded restaurant. Elderly hearing-impaired subjects trained for 8weeks on a CL game that, like a musical instrument, challenged them to monitor subtle deviations between predicted and actual auditory feedback as they moved their fingertip through a virtual soundscape. We performed our study as a randomized, double-blind, placebo-controlled trial by training other subjects in an auditory working-memory (WM) task. Subjects in both groups improved at their respective auditory tasks and reported comparable expectations for improved speech processing, thereby controlling for placebo effects. Whereas speech intelligibility was unchanged after WM training, subjects in the CL training group could correctly identify 25% more words in spoken sentences or digit sequences presented in high levels of background noise. Numerically, CL audiomotor training provided more than three times the benefit of our subjects' hearing aids for speech processing in noisy listening conditions. Gains in speech intelligibility could be predicted from gameplay accuracy and baseline inhibitory control. However, benefits did not persist in the absence of continuing practice. These studies employ stringent clinical standards to demonstrate that perceptual learning on a computerized audio game can transfer to "real-world" communication challenges.