Perceptual consequences of disrupted auditory nerve activity were systematically studied in twenty-one subjects who had been clinically diagnosed with auditory neuropathy (AN), a recently-defined disorder characterized by normal outer hair cell function but disrupted auditory nerve function. Neurological and electrophysical evidence suggests that disrupted auditory nerve activity is due to either desynchronized or reduced neural activity or both. Psychophysical measures showed that the disrupted neural activity has minimal effects on intensity related perception, such as loudness discrimination, pitch discrimination at high frequencies, and sound localization using interaural level differences. In contrast, the disrupted neural activity significantly impairs timing related perception, such as pitch discrimination at low frequencies, temporal integration, gap detection, temporal modulation detection, backward and forward masking, signal detection in noise, binaural beats, and sound localization using interaural time differences. These perceptual consequences are the opposite of what is typically observed in cochlear-impaired subjects who have impaired intensity perception but relatively normal temporal processing after taking their impaired intensity perception into account. These differences in perceptual consequences between auditory neuropathy and cochlear damage suggest the use of different neural codes in auditory perception: a sub-optimal spike count code for intensity processing, a synchronized spike code for temporal processing, and a duplex code for frequency processing. We also proposed two underlying physiological models based on desynchronized and reduced discharge in the auditory nerve to successfully account for the observed neurological and behavioral data. The present methods and measures cannot differentiate between these two AN models, but future studies using electric stimulation of the auditory nerve via a cochlear implant might. The present results not only illustrate the unique contribution of neural synchrony to sensory perception but also provide guidance for translational research in terms of better diagnosis and management of human communication disorders.