A listener's sensitivity to the interaural correlation (IAC) of sound plays an important role in several phenomena in binaural hearing. Although IAC has been examined extensively in neurophysiological studies in animals and in psychophysical studies in humans, little is known about the neural basis of sensitivity to IAC in humans. The present study employed functional magnetic resonance imaging to measure blood oxygen level-dependent (BOLD) activity in auditory brainstem and cortical structures in human listeners during presentation of band-pass noise stimuli between which IAC was varied systematically. The stimuli evoked significant bilateral activation in the inferior colliculus, medial geniculate body, and auditory cortex. There was a significant positive relationship between BOLD activity and IAC which was confined to a distinct subregion of primary auditory cortex located bilaterally at the lateral extent of Heschl's gyrus. Comparison with published anatomical data indicated that this area may also be cytoarchitecturally distinct. Larger differences in activation were found between levels of IAC near unity than between levels near zero. This response pattern is qualitatively compatible with previous measures of psychophysical and neurophysiological sensitivity to IAC