The study explores the relationship between hearing impairment and psychotic illness in twenty hospitalized patients (aged 55–77) using as controls twenty age-matched community-based older subjects with no psychiatric illness. All subjects received full psychiatric evaluations and comprehensive audiologic assessments. Data were analyzed by discriminant analysis and ANOVA. Experimental subjects were found to have significantly poorer unilateral pure tone average (PTA) and significantly poorer bilateral speech discrimination ability than control subjects. Patients with a mood disorder had poorer unilateral PTAs than controls, but did not exhibit significantly poorer speech discrimination. Subjects with specifically paranoid ideation were found to have significantly better left ear speech discrimination than nonparanoid subjects. Our data suggest that hearing impairment should possibly be considered a potential risk factor for the development of psychosis in the elderly.