Psychological noise is defined as a person's internal preoccupations, prejudices, opinions and other qualities that affect his ability to understand and communicate in an environment. Noise by definition is a distraction of sorts that interferes with communication, and psychological noise is a distraction from within rather than outside the individual.
According to About.com, when someone is worried about a problem, he is less able to listen and process what he hears. The worries are making mental noise that is distracting him from the conversation at hand. When a person is involved in a conversation about which he has already formed some opinions already, he is also less likely to hear completely what is being communicated or to listen with an open mind.