Abstract: Single-file diffusion (SFD) of an infinite one-dimensional chain of interacting particles has a long-time mean-square displacement ∝t1/2, independent of the type of interparticle repulsive interaction. This behavior is also observed in finite-size chains, although only for certain intervals of time t depending on the chain length L, followed by the ∝t for t→∞, as we demonstrate for a closed circular chain of diffusing interacting particles. Here, we show that spatial correlation of noise slows down SFD and can result, depending on the amount of correlated noise, in either subdiffusive behavior ∝tα, where 0<α<1/2, or even in a total suppression of diffusion (in the limit N→∞). Spatial correlation can explain the subdiffusive behavior in recent SFD experiments in circular channels.