We have investigated the effects of hypoxia in an altitude chamber on auditory localization. Ten volunteers were tested at 18,000 ft (5,486 m), and through 12,000, 8,000, and 5,000 ft (3,657, 2,438, and 1,524 m) with directional sounds recorded via a dummy head microphone and presented binaurally. The sequence encompassed the horizontal plane. We found large intersubject variation in the response to altitude but absolute error (unsigned error) was always increased: at 18,000 ft the mean effect for the group was highly significant (p < 0.00001). The effect persisted during descent (p < 0.001 at 12,000 ft). Directional bias (mean signed error) was also substantially affected in four subjects, in that sounds originally presented in the lateral quadrants were mislocated further to the rear (p < 0.05). The incidence of front/behind confusion was not affected by altitude. We discuss these findings in relation to the proposed use of directional sounds for flight navigation and warning systems.