Recent studies suggest that an auditory nonlinearity converts second-order sinusoidal amplitude modulation (SAM) (i.e., modulation of SAM depth) into a first-order SAM component, which contributes to the perception of second-order SAM. However, conversion may also occur in other ways such as cochlear filtering. The present experiments explored the source of the first-order SAM component by investigating the ability to detect a 5-Hz, first-order SAM probe in the presence of a second-order SAM masker beating at the probe frequency. Detection performance was measured as a function of masker-carrier modulation frequency, phase relationship between the probe and masker modulator, and probe modulation depth. In experiment 1, the carrier was a 5-kHz sinusoid presented either alone or within a notched-noise masker in order to restrict off-frequency listening. In experiment 2, the carrier was a white noise. The data obtained in both carrier conditions are consistent with the existence of a modulation distortion component. However, the phase yielding poorest detection performance varied across experimental conditions between 0° and 180°, confirming that, in addition to nonlinear mechanisms, cochlear filtering and off-frequency listening play a role in second-order SAM perception. The estimated magnitude of the modulation distortion component ranges from 5%–12%. ©2005 Acoustical Society of America.