Although bilateral cochlear implantation has the potential to improve sound localization and speech understanding in noise, obstacles exist in presenting maximally useful binaural information to bilateral cochlear-implant (CI) users. One obstacle is that electrode arrays may differ in cochlear position by several millimeters, thereby stimulating different neural populations. Effects of interaural frequency mismatch on binaural processing were studied in normal-hearing (NH) listeners using band-limited pulse trains, thereby avoiding confounding factors that may occur in CI users. In experiment 1, binaural image fusion was measured to capture perceptual number, location, and compactness. Subjects heard a single, compact image on 73% of the trials. In experiment 2, intracranial image location was measured for different interaural time differences (ITDs) and interaural level differences (ILDs). For larger mismatch, locations perceptually shifted towards the ear with the higher carrier frequency. In experiment 3, ITD and ILD just-noticeable differences (JNDs) were measured. JNDs increased with decreasing bandwidth and increasing mismatch, but were always measurable up to 3 mm of mismatch. If binaural-hearing mechanisms are similar between NH and CI subjects, these results may explain reduced sensitivity of ITDs and ILDs in CI users. Large mismatches may lead to distorted spatial maps and reduced binaural image fusion.