The relation between auditory filters estimated from psychophysical methods and peripheral tuning was evaluated using a computational auditory-nerve (AN) model that included many of the response properties associated with nonlinear cochlear tuning. The phenomenological AN model included the effects of dynamic level-dependent tuning, compression, and suppression on the responses of high-, medium-, and low-spontaneous-rate AN fibers. Signal detection theory was used to evaluate psychophysical performance limits imposed by the random nature of AN discharges and by random-noise stimuli. The power-spectrum model of masking was used to estimate psychophysical auditory filters from predicted AN-model detection thresholds for a tone signal in fixed-level notched-noise maskers. Results demonstrate that the role of suppression in broadening peripheral tuning in response to the noise masker has implications for the interpretation of psychophysical auditory-filter estimates. Specifically, the estimated psychophysical auditory-filter equivalent-rectangular bandwidths (ERBs) that were derived from the nonlinear AN model with suppression always overestimated the ERBs of the low-level peripheral model filters. Further, this effect was larger for an 8-kHz signal than for a 2-kHz signal, suggesting a potential characteristic-frequency (CF) dependent bias in psychophysical estimates of auditory filters due to the increase in strength of cochlear nonlinearity with increases in CF.