Older adults, even those without hearing impairment, often experience increased difficulties understanding speech in the presence of background noise. This study examined the role of age-related declines in subcortical auditory processing in the perception of speech in different types of background noise. Participants included normal-hearing young (19–29 years) and older (60–72 years) adults. Normal hearing was defined as pure-tone thresholds of 25 dB HL or better at octave frequencies from 0.25 to 4 kHz in both ears and at 6 kHz in at least one ear. Speech reception thresholds (SRTs) to sentences were measured in steady-state (SS) and 10-Hz amplitude-modulated (AM) speech-shaped noise, as well as two-talker babble. In addition, click-evoked auditory brainstem responses (ABRs) and envelope following responses (EFRs) in response to the vowel /ɑ/ in quiet, SS, and AM noise were measured. Of primary interest was the relationship between the SRTs and EFRs. SRTs were significantly higher (i.e., worse) by about 1.5 dB for older adults in two-talker babble but not in AM and SS noise. In addition, the EFRs of the older adults were less robust compared to the younger participants in quiet, AM, and SS noise. Both young and older adults showed a “neural masking release,” indicated by a more robust EFR at the trough compared to the peak of the AM masker. The amount of neural masking release did not differ between the two age groups. Variability in SRTs was best accounted for by audiometric thresholds (pure-tone average across 0.5–4 kHz) and not by the EFR in quiet or noise. Aging is thus associated with a degradation of the EFR, both in quiet and noise. However, these declines in subcortical neural speech encoding are not necessarily associated with impaired perception of speech in noise, as measured by the SRT, in normal-hearing older adults.