This study was designed to test two hypotheses about binaural hearing: (1) that binaural cues are primarily processed in the hemisphere contralateral to the perceived location of a sound; and (2) that the two main binaural cues, interaural timing differences and interaural level differences, are processed in separate channels in the auditory cortex. Magnetoencephalography was used to measure brain responses to dichotic pitches--a perception of pitch created by segregating a narrow band of noise from a wider band of noise--derived from interaural timing or level disparities. Our results show a strong modulation of interhemispheric M100 amplitudes by ITD cues. When these cues simulated source presentation unilaterally from the right hemispace, M100 amplitude changed from a predominant right hemisphere pattern to a bilateral pattern. In contrast, ILD cues lacked any capacity to alter the right hemispheric distribution. These data indicate that intrinsic hemispheric biases are large in comparison to any contralaterality biases in the auditory system. Importantly, both types of binaural cue elicited a circa 200 ms latency object-related negativity component, believed to reflect automatic cortical processes involved in distinguishing concurrent auditory objects. These results support the conclusion that ITDs and ILDs are processed by distinct neuronal populations to relatively late stages of cortical processing indexed by the M100. However information common to the two cues seems to be extracted for use in a subsequent stage of auditory scene segregation indexed by the object related negativity. This may place a new bound on the extent to which sound location cues are processed in separate channels of the auditory cortex.