Evidence from human psychophysical and animal electrophysiological studies suggests that sensitivity to interaural time delay (ITD) in the modulating envelope of a high-frequency carrier can be enhanced using half-wave rectified stimuli. Recent evidence has shown potential benefits of equivalent electrical stimuli to deaf individuals with bilateral cochlear implants (CIs). In the current study we assessed the effects of envelope shape on ITD sensitivity in the primary auditory cortex of normal-hearing ferrets, and profoundly-deaf animals with bilateral CIs. In normal-hearing animals, cortical sensitivity to ITDs (±1 ms in 0.1-ms steps) was assessed in response to dichotically-presented i) sinusoidal amplitude-modulated (SAM) and ii) half-wave rectified (HWR) tones (100-ms duration; 70 dB SPL) presented at the best-frequency of the unit over a range of modulation frequencies. In separate experiments, adult ferrets were deafened with neomycin administration and bilaterally-implanted with intra-cochlear electrode arrays. Electrically-evoked auditory brainstem responses (EABRs) were recorded in response to bipolar electrical stimulation of the apical pair of electrodes with singe biphasic current pulses (40 µs per phase) over a range of current levels to measure hearing thresholds. Subsequently, we recorded cortical sensitivity to ITDs (±800 µs in 80-µs steps) within the envelope of SAM and HWR biphasic-pulse trains (40 µs per phase; 6000 pulses per second, 100-ms duration) over a range of modulation frequencies. In normal-hearing animals, nearly a third of cortical neurons were sensitive to envelope-ITDs in response to SAM tones. In deaf animals with bilateral CI, the proportion of ITD-sensitive cortical neurons was approximately a fifth in response to SAM pulse trains. In normal-hearing and deaf animals with bilateral CI the proportion of ITD sensitive units and neural sensitivity to ITDs increased in response to HWR, compared with SAM stimuli. Consequently, novel stimulation strategies based on envelope enhancement may prove beneficial to individuals with bilateral cochlear implants.