A multichannel dynamic-range compressor system using digital frequency warping is described. A frequency-warped filter is realized by replacing the filter unit delays with all-pass filters. The appropriate design of the frequency warping gives a nonuniform frequency representation very close to the auditory Bark scale. The warped compressor is shown to have substantially reduced group delay in comparison with a conventional design having comparable frequency resolution. The warped compressor, however, has more delay at low than at high frequencies, which can lead to perceptible changes in the signal. The detection threshold for the compressor group delay was determined as a function of the number of all-pass filter sections in cascade needed for a detectible change in signal quality. The test signals included clicks, vowels, and speech, and results are presented for both normal-hearing and hearing-impaired subjects. Thresholds for clicks are lower than thresholds for vowels, and hearing-impaired subjects have higher thresholds than normal-hearing listeners. A frequency-warped compressor using a cascade of 31 all-pass filter sections offers a combination of low overall delay, good frequency resolution, and imperceptible frequency-dependent delay effects for most listening conditions.