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Patients with age-related hearing loss face hearing difficulties in daily life. The causes of age-related hearing loss are complex and include changes in peripheral hearing, central processing, and cognitive-related abilities. Furthermore, the factors by which aging relates to hearing loss via changes in auditory processing ability are still unclear. In this cross-sectional study, we evaluated 27 older adults (over 60 years old) with age-related hearing loss, 21 older adults (over 60 years old) with normal hearing, and 30 younger subjects (18–30 years old) with normal hearing. We used the outcome of the upper-threshold test, including the time-compressed threshold and the speech recognition threshold in noisy conditions, as a behavioral indicator of auditory processing ability. We also used electroencephalography to identify presbycusis-related abnormalities in the brain while the participants were in a spontaneous resting state. The time-compressed threshold and speech recognition threshold data indicated significant differences among the groups. In patients with age-related hearing loss, information masking (babble noise) had a greater effect than energy masking (speech-shaped noise) on processing difficulties. In terms of resting-state electroencephalography signals, we observed enhanced frontal lobe (Brodmann’s area, BA11) activation in the older adults with normal hearing compared with the younger participants with normal hearing, and greater activation in the parietal (BA7) and occipital (BA19) lobes in the individuals with age-related hearing loss compared with the younger adults. Our functional connection analysis suggested that compared with younger people, the older adults with normal hearing exhibited enhanced connections among networks, including the default mode network, sensorimotor network, cingulo-opercular network, occipital network, and frontoparietal network. These results suggest that both normal aging and the development of age-related hearing loss have a negative effect on advanced auditory processing capabilities and that hearing loss accelerates the decline in speech comprehension, especially in speech competition situations. Older adults with normal hearing may have increased compensatory attentional resource recruitment represented by the top-down active listening mechanism, while those with age-related hearing loss exhibit decompensation of network connections involving multisensory integration.