Sounds convolved with individual head-related transfer functions and presented through headphones can give very natural percepts of the three-dimensional auditory space. We recorded whole-scalp neuromagnetic responses to such stimuli to compare reactivity of the human auditory cortex to sound azimuth and elevation. The results suggest that the human auditory cortex analyses sound azimuth, based on both binaural and monaural localization cues, mainly in the hemisphere contralateral to the sound, whereas elevation in the anterior space and in the lateral auditory space in general, both strongly relying on monaural spectral cues, are analyzed in more detail in the right auditory cortex. The binaural interaural time and interaural intensity difference cues were processed in the auditory cortex around 100-150 ms and the monaural spectral cues later around 200-250 ms.