We examine the functional characteristics of auditory cortical areas that are sensitive to spatial cues in the human brain, and determine whether they can be dissociated from parietal lobe mechanisms. Three positron emission tomography (PET) experiments were conducted using a speaker array permitting quasi free-field sound presentation within the scanner. Posterior auditory cortex responded to sounds that varied in their spatial distribution, but only when multiple complex stimuli were presented simultaneously, implicating this cortical system in disambiguation of overlapping auditory sources. We also found that the right inferior parietal cortex is specifically recruited in localization tasks, and that its activity predicts behavioral performance, consistent with its involvement in sensorimotor integration and spatial transformation. These findings clarify the functional roles of posterior auditory and parietal cortices, and help to reconcile competing models of auditory cortical organization.