Amblyopia results in a loss of visual acuity, contrast sensitivity, and position acuity. However, the nature of the neural losses is not yet fully understood. Here we report the results of experiments using noise to try to better understand the losses in amblyopia. Specifically, in one experiment we compared the performance of normal, amblyopic, and ideal observers for detecting a localized signal (a discrete frequency pattern or DFP) in fixed contrast white noise. In a second experiment, we used visibility-scaled noise and varied both the visibility of the noise (from 2 to 20 times the noise detection threshold) and the spatial frequency of the signal. Our results show a loss of efficiency for detection of known signals in noise that increases with the spatial frequency of the signal in observers with amblyopia. To determine whether the loss of efficiency was a consequence of a mismatched template, we derived classification images. We found that although the amblyopic observers' template was shifted to lower spatial frequencies, the shift was insufficient to account for their threshold elevation. Reduced efficiency in the amblyopic visual system may reflect a high level of internal noise, a poorly matched position template, or both. To analyze the type of internal noise we used an “N-pass” technique, in which observers performed the identical experiment N times (where N = 3 or 4). The amount of disagreement between the repeated trials enables us to parse the internal noise into random noise and consistent noise beyond that due to the poorly matched template. Our results show that the amblyopes' reduced efficiency for detecting signals in noise is explained in part by reduced template efficiency but to a greater extent by increased random internal noise. This loss is more or less independent of external noise contrast over a log unit range of external noise.