Presented at the 8th International Conference on Auditory Display (ICAD), Kyoto, Japan, July 2-5, 2002.An audio localization test of moving virtual sound sources was carried out in a spatially immersive virtual environment, using loudspeaker array with vector based amplitude panning for reproduction of sound sources. Azimuth and elevation error in localization was measured. In this experiment the main emphasis was to explore the effect of a distracting auditory stimulus. Eight subjects accomplished a set of localization tasks. In these tasks they perceived the azimuth more accurately than the elevation. The distracting auditory stimulus decreased the localization accuracy. There was large variation between the subjects. The median error in azimuth for the most inaccurate subject was approximately twice as much as for the most accurate subject. The amount of the localization blur was dependent on angular distance from virtual sound source position to the nearest loudspeaker. The localization blur increased while the angular distance increased. Results of this experiment were compared with the results achieved in our previous experiment without the distracting stimulus