Alternate to Hallucination but applied to hearing?

"auditory hallucinations" , as mentioned by Anonym, is one of the main features of schizophrenia.

• A paracusia, or auditory hallucination, is a form of hallucination that involves perceiving sounds without auditory stimulus. Auditory hallucinations need to be distinguished from endaural phenomena in which sounds are heard without any external acoustic stimulation but arise from disorders of the frontal lobe, temporal lobe, language processing system, ear or auditory system. A common form of auditory hallucination involves hearing one or more talking voices. This may be associated with psychotic disorders, and holds special significance in diagnosing these conditions. However, individuals may hear voices without suffering from diagnosable mental illness. There are three main categories into which the hearing of talking voices can often fall: a person hearing a voice speak one's thoughts, a person hearing one or more voices arguing, or a person hearing a voice narrating his/her own actions. These three categories do not account for all types of auditory hallucinations.

Also, you can try tinnitus

Tinnitus is the hearing of sound when no external sound is present.

It may be defined in the dictionaries only as a ringing or buzzing sound in one's ears but doctors use it when hearing is stimulated by a sound that is not there.

Also see tinnitus at mayo clinic

More informal than auditory hallucinations would be "hearing things" as in, "I must be hearing things" (with the implication that the "things" do not exist).