The contribution of interaural time differences (ITDs) to the localization of virtual sound sources with and without head motion was examined. Listeners estimated the apparent azimuth, elevation, and distance of virtual sources presented over headphones. Stimuli (3-s, white noise) were synthesized from minimum-phase representations of nonindividualized head-related transfer functions (HRTFs); binaural magnitude spectra were derived from the minimum phase estimates and ITDs were represented as a pure delay. During dynamic conditions, listeners were encouraged to move their heads; head position was tracked and stimuli were synthesized in real time using a Convolvotron to simulate a stationary external sound source. Two synthesis conditions were tested: (1) both interaural level differences (ILDs) and ITDs correctly correlated with source location and head motion and (2) ITDs correct, no ILDs (flat magnitude spectrum). Head movements reduced azimuth confusions primarily when interaural cues were correctly correlated, although a smaller effect was also seen for ITDs alone. Externalization was generally poor for ITD-only conditions and was enhanced by head motion only for normal HRTFs. Overall, the data suggest that, while ITDs alone can provide a significant cue for azimuth, the errors most commonly associated with virtual sources are reduced by location-dependent magnitude cues.