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This study aimed to characterize horizontal plane sound localization in interfering noise at different signal-to-noise ratios (SNRs) and to compare performance across normal-hearing listeners and users of unilateral and bilateral cochlear implants (CIs). CI users report difficulties with listening in noisy environments. Although their difficulties with speech understanding have been investigated in several studies, the ability to localize sounds in background noise has not extensively been examined, despite the benefits of binaural hearing being greatest in noisy situations. Sound localization is a measure of binaural processing and is thus well suited to assessing the benefit of bilateral implantation. The results will inform clinicians and implant manufacturers how to focus their efforts to improve localization with CIs in noisy situations.Six normal-hearing listeners, four unilateral, and 10 bilateral CI users indicated the perceived location of sound sources using a light pointer method. Target sounds were noise pulses played from one of 11 loudspeakers placed between −80 and +80 degrees in the frontal horizontal plane in the free field. Localization was assessed in quiet and in diffuse background noise at SNRs between +10 and –7 dB. Speech reception thresholds were measured and their relation to the localization results examined.Localization performance declined with decreasing SNR: target sounds were perceived closer to the median plane and the standard deviation of responses increased. Localization performance across groups was compared using a measure of “Spatial Resolvability” (SR). This measure gives the angular separation between two sound sources that would enable an ideal observer to correctly distinguish them 69.1% of the time. For all participants SR increased with decreasing SNR, that is, at low SNRs the spatial separation between sound sources remained distinguishable only when it was larger. Normal-hearing participants performed best, with SR between 1.4 and 5.1 degrees in quiet. Bilateral CI users showed SR between 8.3 and 43.6 degrees in quiet, corresponding approximately to the spatial resolution of normal-hearing listeners at an SNR of –5 dB. Most bilateral CI users had lost the ability to correctly determine which side the sound came from at an SNR of –3 dB. Overall, the SNR had to be at least +7 dB to achieve localization performance near to that in quiet for all bilateral CI users. No significant correlation was found between spatial resolution and speech reception thresholds, but the speech processor sensitivity setting did significantly affect performance. Unilateral CI users showed the most severe localization problems, with only two of four participants being able to correctly determine which side sounds came from in quiet.This study is the first to examine sound localization with CIs at various SNRs and to compare it with normal hearing. The results confirm that localization with CIs is strongly disrupted in noisy situations. Bilateral CIs were shown to be clearly superior over unilateral CIs for localization in quiet and in noisy situations. With bilateral CIs, localization declined at moderately high absolute noise levels (>63 dB SPL), suggesting that an extension of the acoustic-dynamic range to higher levels would be beneficial. The absence of a relation between speech reception thresholds and spatial resolution highlights the need for additional clinical tests to assess the binaural benefit of a second implant.