The perception of the direction of a sound source in the horizontal plane is largely dependent upon the relative arrival times of salient points in the waveform and upon the difference in amplitude at the two ears. Other effects such as binaural release from masking are mediated mainly by the percept of lateralisation. In an extensive literature review the major experiments in binaural unmasking. discrimination and lateralisation are introduced and the most influential binaural detection and lateralisation models discussed. It is argued that these models are all cross-correlation mechanisms operating upon the differences between the firing patterns of the two auditory nerves. A study of the response of the binaural system to changes in its input would be a critical test of such models, so an experiment to measure the threshold of a static tone in noise with temporally varying Interaural phase was performed. The results suggest that binaural processing is slow. The extent of lateralisation of bandpass (10%) filtered clicks of both low and high frequencies was studied with various interaural time and amplitude differences. A novel feature of the research, apart from the scaling technique used, was that subjects were encouraged to listen for multiple images. These experiments are sensitive to the breakdown of sensory fusion, and so pose a severe test for binaural models. Very similar results at both low- (260 Hz) and high- (8000 Hz) frequencies suggest a common lateralisation mechanism operating primarily upon interaural onset time differences. A binaural model is proposed which extends existing cross-correlation models. Included is an auditory nerve model which adapts and saturates. The other new element is coincidence detectors with significant (1 ms) integration times, which more closely represent the temporal Integration properties of real neural networks. The inclusion of the auditory nerve model Is very succesful, but the extended coincidence detectors prove less helpful. A single channel excitatory-inhibitory model Is also discussed.