Over the years, the effect of aging on auditory function has been investigated in animal models and humans in an effort to characterize age-related changes in both perception and physiology. Here, we review how aging may impact neural encoding and processing of binaural and spatial cues in human listeners with a focus on recent work by the authors as well as others. Age-related declines in monaural temporal processing, as estimated from measures of gap detection and temporal fine structure discrimination, have been associated with poorer performance on binaural tasks that require precise temporal processing. In lateralization and localization tasks, as well as in the detection of signals in noise, marked age-related changes have been demonstrated in both behavioral and electrophysiological measures and have been attributed to declines in neural synchrony and reduced central inhibition with advancing age. Evidence for such mechanisms, however, are influenced by the task (passive vs. attending) and the stimulus paradigm (e.g., static vs. continuous with dynamic change). That is, cortical auditory evoked potentials (CAEP) measured in response to static interaural time differences (ITDs) are larger in older versus younger listeners, consistent with reduced inhibition, while continuous stimuli with dynamic ITD changes lead to smaller responses in older compared to younger adults, suggestive of poorer neural synchrony. Additionally, the distribution of cortical activity is broader and less asymmetric in older than younger adults, consistent with the hemispheric asymmetry reduction in older adults model of cognitive aging. When older listeners attend to selected target locations in the free field, their CAEP components (N1, P2, P3) are again consistently smaller relative to younger listeners, and the reduced asymmetry in the distribution of cortical activity is maintained. As this research matures, proper neural biomarkers for changes in spatial hearing can provide objective evidence of impairment and targets for remediation. Future research should focus on the development and evaluation of effective approaches for remediating these spatial processing deficits associated with aging and hearing loss.