Older people with hearing problems often experience difficulties understanding speech in the presence of background sound. As a result, they may disengage in social situations, which has been associated with negative psychosocial health outcomes. Measuring listening (dis)engagement during challenging listening situations has received little attention thus far. We recruit young, normal-hearing human adults (both sexes) and investigate how speech intelligibility and engagement during naturalistic story listening is affected by the level of acoustic masking (12-talker babble) at different signal-to-noise ratios (SNRs). In , we observed that word-report scores were above 80% for all but the lowest SNR (−3 dB SNR) we tested, at which performance dropped to 54%. In , we calculated intersubject correlation (ISC) using EEG data to identify dynamic spatial patterns of shared neural activity evoked by the stories. ISC has been used as a neural measure of participants' engagement with naturalistic materials. Our results show that ISC was stable across all but the lowest SNRs, despite reduced speech intelligibility. Comparing ISC and intelligibility demonstrated that word-report performance declined more strongly with decreasing SNR compared to ISC. Our measure of neural engagement suggests that individuals remain engaged in story listening despite missing words because of background noise. Our work provides a potentially fruitful approach to investigate listener engagement with naturalistic, spoken stories that may be used to investigate (dis)engagement in older adults with hearing impairment.