A computer model of the auditory periphery is used to study the involvement of auditory-nerve (AN) adaptation in forward-masking effects. An existing model is shown to simulate published AN recovery functions both qualitatively and quantitatively after appropriate parameter adjustments. It also simulates published data showing only small threshold shifts when a psychophysical forward-masking paradigm is applied to AN responses. The model is extended to simulate a simple but physiologically plausible mechanism for making threshold decisions based on coincidental firing of a number of AN fibers. When this is used, much larger threshold shifts are observed of a size consistent with published psychophysical observations. The problem of how stimulus-driven firing can be distinguished from spontaneous activity near threshold is also addressed by the same decision mechanism. Overall, the modeling results suggest that poststimulatory reductions in AN activity can make a substantial contribution to the raised thresholds observed in many psychophysical studies of forward masking.