The cortical mechanisms of perceptual segregation of concurrent sound sources were examined, based on binaural detection of interaural timing differences. Auditory event-related potentials were measured from 11 healthy subjects. Binaural stimuli were created by introducing a dichotic delay of 500-ms duration to a narrow frequency region within a broadband noise, and resulted in a perception of a centrally located noise and a right-lateralized pitch (dichotic pitch). In separate listening conditions, subjects actively discriminated and responded to randomly interleaved binaural and control stimuli, or ignored random stimuli while watching silent cartoons. In a third listening condition subjects ignored stimuli presented in homogenous blocks. For all listening conditions, the dichotic pitch stimulus elicited an object-related negativity (ORN) at a latency of about 150-250 ms after stimulus onset. When subjects were required to actively respond to stimuli, the ORN was followed by a P400 wave with a latency of about 320-420 ms. These results support and extend a two-stage model of auditory scene analysis in which acoustic streams are automatically parsed into component sound sources based on source-relevant cues, followed by a controlled process involving identification and generation of a behavioral response.