Spatial hearing is widely regarded as helpful in recognizing a sound amid other competing sounds. It is a matter of debate, however, whether spatial cues contribute to "stream segregation," which refers to the specific task of assigning multiple interleaved sequences of sounds to their respective sources. The present study employed "rhythmic masking release" as a measure of the spatial acuity of stream segregation. Listeners discriminated between rhythms of noise-burst sequences presented from free-field targets in the presence of interleaved maskers that varied in location. For broadband sounds in the horizontal plane, target-masker separations of ≥8° permitted rhythm discrimination with d' ≥ 1; in some cases, such thresholds approached listeners' minimum audible angles. Thresholds were the same for low-frequency sounds but were substantially wider for high-frequency sounds, suggesting that interaural delays provided higher spatial acuity in this task than did interaural level differences. In the vertical midline, performance varied dramatically as a function of noise-burst duration with median thresholds ranging from >30° for 10-ms bursts to 7.1° for 40-ms bursts. A marked dissociation between minimum audible angles and masking release thresholds across the various pass-band and burst-duration conditions suggests that location discrimination and spatial stream segregation are mediated by distinct auditory mechanisms.