Sensory function is mediated by interactions between external stimuli and intrinsic cortical dynamics that are evident in the modulation of evoked responses by cortical state. A number of recent studies across different modalities have demonstrated that the patterns of activity in neuronal populations can vary strongly between synchronized and desynchronized cortical states, i.e., in the presence or absence of intrinsically generated up and down states. Here we investigated the impact of cortical state on the population coding of tones and speech in the primary auditory cortex (A1) of gerbils, and found that responses were qualitatively different in synchronized and desynchronized cortical states. Activity in synchronized A1 was only weakly modulated by sensory input, and the spike patterns evoked by tones and speech were unreliable and constrained to a small range of patterns. In contrast, responses to tones and speech in desynchronized A1 were temporally precise and reliable across trials, and different speech tokens evoked diverse spike patterns with extremely weak noise correlations, allowing responses to be decoded with nearly perfect accuracy. Restricting the analysis of synchronized A1 to activity within up states yielded similar results, suggesting that up states are not equivalent to brief periods of desynchronization. These findings demonstrate that the representational capacity of A1 depends strongly on cortical state, and suggest that cortical state should be considered as an explicit variable in all studies of sensory processing.