Dyslexia is a language-based neurodevelopmental disorder. It is characterized as a persistent deficit in reading and spelling. These difficulties have been shown to result from an underlying impairment of the phonological component of language, possibly also affecting speech perception. Although there is little evidence for such a deficit under optimal, quiet listening conditions, speech perception difficulties in adults with dyslexia are often reported under more challenging conditions, such as when speech is masked by noise. Previous studies have shown that these difficulties are more pronounced when the background noise is speech and when little spatial information is available to facilitate differentiation between target and background sound sources. In this study, we investigated the neuroimaging correlates of speech-in-speech perception in typical readers and participants with dyslexia, focusing on the effects of different listening configurations. Fourteen adults with dyslexia and 14 matched typical readers performed a subjective intelligibility rating test with single words presented against concurrent speech during functional magnetic resonance imaging (fMRI) scanning. Target words were always presented with a four-talker background in one of three listening configurations: Dichotic, Binaural or Monaural. The results showed that in the Monaural configuration, in which no spatial information was available and energetic masking was maximal, intelligibility was severely decreased in all participants, and this effect was particularly strong in participants with dyslexia. Functional imaging revealed that in this configuration, participants partially compensate for their poorer listening abilities by recruiting several areas in the cerebral networks engaged in speech perception. In the Binaural configuration, participants with dyslexia achieved the same performance level as typical readers, suggesting that they were able to use spatial information when available. This result was, however, associated with increased activation in the right superior temporal gyrus, suggesting the need to reallocate neural resources to overcome speech-in-speech difficulties. Taken together, these results provide further understanding of the speech-in-speech perception deficit observed in dyslexia.