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A novel dual-microphone speech enhancement technique is proposed in the present paper. The technique utilizes the coherence between the target and noise signals as a criterion for noise reduction and can be generally applied to arrays with closely spaced microphones, where noise captured by the sensors is highly correlated. The proposed algorithm is simple to implement and requires no estimation of noise statistics. In addition, it offers the capability of coping with multiple interfering sources that might be located at different azimuths. The proposed algorithm was evaluated with normal hearing listeners using intelligibility listening tests and compared against a well-established beamforming algorithm. Results indicated large gains in speech intelligibility relative to the baseline (front microphone) algorithm in both single and multiple-noise source scenarios. The proposed algorithm was found to yield substantially higher intelligibility than that obtained by the beamforming algorithm, particularly when multiple noise sources or competing talker(s) were present. Objective quality evaluation of the proposed algorithm also indicated significant quality improvement over that obtained by the beamforming algorithm. The intelligibility and quality benefits observed with the proposed coherence-based algorithm make it a viable candidate for hearing aid and cochlear implant devices.