An individual sound can be filtered so that it appears to emanate from a specified direction when played by headphones. The filters simulate the distortion of the sound caused by the body, head, and pinna. Today fast DSP (digital signal processing) hardware allows real time filtering and dynamic updating of the filter properties, thus allowing interactive processes to be created for real time spatialization (e.g. allowing head movement and movment of virtual sources). The number of sound sources which can be presented simultaneously is limited by the processing capacity of the DSP-hardware. Presently available hardware like the Motorola 56001 can process two spatial sound sources in real time. Spatial sound is presently used in the auralization of models for room acoustics. Spatial sound gives an enhanced situational awareness and aids in the separation of different data streams (``Cocktail Party Effect''). Therefore, future applications could be in the fields of telerobotic control, air traffic control, data auralization and teleconferences.