This study examined how speech babble noise differentially affected the auditory P3 responses and the associated neural oscillatory activities for consonant and vowel discrimination in relation to segmental- and sentence-level speech perception in noise. The data were collected from 16 normal-hearing participants in a double-oddball paradigm that contained a consonant (/ba/ to /da/) and vowel (/ba/ to /bu/) change in quiet and noise (speech-babble background at a −3 dB signal-to-noise ratio) conditions. Time-frequency analysis was applied to obtain inter-trial phase coherence (ITPC) and event-related spectral perturbation (ERSP) measures in delta, theta, and alpha frequency bands for the P3 response. Behavioral measures included percent correct phoneme detection and reaction time as well as percent correct IEEE sentence recognition in quiet and in noise. Linear mixed-effects models were applied to determine possible brain-behavior correlates. A significant noise-induced reduction in P3 amplitude was found, accompanied by significantly longer P3 latency and decreases in ITPC across all frequency bands of interest. There was a differential effect of noise on consonant discrimination and vowel discrimination in both ERP and behavioral measures, such that noise impacted the detection of the consonant change more than the vowel change. The P3 amplitude and some of the ITPC and ERSP measures were significant predictors of speech perception at segmental- and sentence-levels across listening conditions and stimuli. These data demonstrate that the P3 response with its associated cortical oscillations represents a potential neurophysiological marker for speech perception in noise.