Phantom sensations and sensory hypersensitivity are disordered perceptions that characterize a variety of intractable conditions involving the somatosensory, visual, and auditory modalities. We report physiological correlates of two perceptual abnormalities in the auditory domain: tinnitus, the phantom perception of sound, and hyperacusis, a decreased tolerance of sound based on loudness. Here, subjects with and without tinnitus, all with clinically normal hearing thresholds, underwent 1) behavioral testing to assess sound-level tolerance and 2) functional MRI to measure sound-evoked activation of central auditory centers. Despite receiving identical sound stimulation levels, subjects with diminished sound-level tolerance (i.e., hyperacusis) showed elevated activation in the auditory midbrain, thalamus, and primary auditory cortex compared with subjects with normal tolerance. Primary auditory cortex, but not subcortical centers, showed elevated activation specifically related to tinnitus. The results directly link hyperacusis and tinnitus to hyperactivity within the central auditory system. We hypothesize that the tinnitus-related elevations in cortical activation may reflect undue attention drawn to the auditory domain, an interpretation consistent with the lack of tinnitus-related effects subcortically where activation is less potently modulated by attentional state. The data strengthen, at a mechanistic level, analogies drawn previously between tinnitus/hyperacusis and other, nonauditory disordered perceptions thought to arise from neural hyperactivity such as chronic neuropathic pain and photophobia.