A binaural dereverberation algorithm is presented that utilizes the properties of the interaural coherence (IC) inspired by the concepts introduced in Allen [J. Acoust. Soc. Am. 62, 912-915 (1977)]. The algorithm introduces a non-linear sigmoidal coherence-to-gain mapping that is controlled by an online estimate of the present coherence statistics. The algorithm automatically adapts to a given acoustic environment and provides a stronger dereverberation effect than the original method presented in Allen [J. Acoust. Soc. Am. 62, 912-915 (1977)] in most acoustic conditions. The performance of the proposed algorithm was objectively and subjectively evaluated in terms of its impacts on the amount of reverberation and overall quality. A binaural spectral subtraction method based on Lebart [Acta Acust. Acust. 87, 359-366 (2001)] and a binaural version of the original method of Allen were considered as reference systems. The results revealed that the proposed coherence-based approach is most successful in acoustic scenarios that exhibit a significant spread in the coherence distribution where direct sound and reverberation can be segregated. This dereverberation algorithm is thus particularly useful in large rooms for short source-receiver distances.