The ability to determine the location of a sound source is fundamental to hearing. However, auditory space is not represented in any systematic manner on the basilar membrane of the cochlea, the sensory surface of the receptor organ for hearing. Understanding the means by which sensitivity to spatial cues is computed in central neurons can therefore contribute to our understanding of the basic nature of complex neural representations. We review recent evidence concerning the nature of the neural representation of auditory space in the mammalian brain and elaborate on recent advances in the understanding of mammalian subcortical processing of auditory spatial cues that challenge the “textbook” version of sound localization, in particular brain mechanisms contributing to binaural hearing.