Neural responses to amplitude-modulated (AM) tones in the unanesthetized rabbit inferior colliculus (IC) were studied in an effort to establish explicit relationships between physiological and psychophysical measures of temporal envelope processing. Specifically, responses to variations in modulation depth (m) at the cell’s best modulation frequency, with and without modulation maskers, were quantified in terms of average rate and synchronization to the envelope over the entire perceptual dynamic range of depths. Statistically significant variations in the metrics were used to define neural AM detection and discrimination thresholds. Synchrony emerged at modulation depths comparable with psychophysical AM detection sensitivities in some neurons, whereas the lowest rate-based neural thresholds could not account for psychoacoustical thresholds. The majority of rate thresholds (85%) were −10 dB or higher (in 20 log m), and 16% of the population exhibited no systematic dependence of average rate on m. Neural thresholds for AM detection did not decrease systematically at higher SPLs (as observed psychophysically): thresholds remained constant or increased with level for most cells tested at multiple sound-pressure levels (SPLs). At depths higher than the rate-based detection threshold, some rate modulation-depth functions were sufficiently steep with respect to the across-trial variability of the rate to predict depth discrimination thresholds as low as 1 dB (comparable with the psychophysics). Synchrony, on the other hand, did not vary systematically with m in many cells at high modulation depths. A simple computational model was extended to reproduce several features of the modulation frequency and depth dependence of both transient and sustained pure-tone responders.