Children with dyslexia often exhibit increased variability in sensory and cognitive aspects of hearing relative to typically developing peers. Assistive listening devices (classroom FM systems) may reduce auditory processing variability by enhancing acoustic clarity and attention. We assessed the impact of classroom FM system use for 1 year on auditory neurophysiology and reading skills in children with dyslexia. FM system use reduced the variability of subcortical responses to sound, and this improvement was linked to concomitant increases in reading and phonological awareness. Moreover, response consistency before FM system use predicted gains in phonological awareness. A matched control group of children with dyslexia attending the same schools who did not use the FM system did not show these effects. Assistive listening devices can improve the neural representation of speech and impact reading-related skills by enhancing acoustic clarity and attention, reducing variability in auditory processing.