Despite its ubiquitous use in medicine, and extensive knowledge of its molecular and cellular effects, how anesthesia induces loss of consciousness (LOC) and affects sensory processing remains poorly understood. Specifically, it is unclear whether anesthesia primarily disrupts thalamocortical relay or intercortical signaling. Here we recorded intracranial electroencephalogram (iEEG), local field potentials (LFPs), and single-unit activity in patients during wakefulness and light anesthesia. Propofol infusion was gradually increased while auditory stimuli were presented and patients responded to a target stimulus until they became unresponsive. We found widespread iEEG responses in association cortices during wakefulness, which were attenuated and restricted to auditory regions upon LOC. Neuronal spiking and LFP responses in primary auditory cortex (PAC) persisted after LOC, while responses in higher-order auditory regions were variable, with neuronal spiking largely attenuated. Gamma power induced by word stimuli increased after LOC while its frequency profile slowed, thus differing from local spiking activity. In summary, anesthesia-induced LOC disrupts auditory processing in association cortices while relatively sparing responses in PAC, opening new avenues for future research into mechanisms of LOC and the design of anesthetic monitoring devices.