Neural adaptation enables sensory information to be represented optimally in the brain despite large fluctuations over time in the statistics of the environment. Auditory contrast gain control represents an important example, which is thought to arise primarily from cortical processing. Here we show that neurons in the auditory thalamus and midbrain of mice show robust contrast gain control, and that this is implemented independently of cortical activity. Although neurons at each level exhibit contrast gain control to similar degrees, adaptation time constants become longer at later stages of the processing hierarchy, resulting in progressively more stable representations. We also show that auditory discrimination thresholds in human listeners compensate for changes in contrast, and that the strength of this perceptual adaptation can be predicted from physiological measurements. Contrast adaptation is therefore a robust property of both the subcortical and cortical auditory system and accounts for the short-term adaptability of perceptual judgments.