Abstract: A method and device processes multi-channel audio signals, each channel corresponding to a loudspeaker placed in a particular location in a room, in such a way as to create, over headphones, the sensation of multiple "phantom" loudspeakers placed throughout the room. Head Related Transfer Functions (HRTFs) are chosen according to the elevation and azimuth of each intended loudspeaker relative to the listener, each channel being filtered with an HRTF such that when combined into left and right channels and played over headphones, the listener senses that the sound is actually produced by phantom loudspeakers placed throughout the "virtual" room. A database collection of sets of HRTF coefficients from numerous individuals and subsequent matching of the best HRTF set to the individual listener provides the listener with listening sensations similar to that which the listener, as an individual, would experience when listening to multiple loudspeakers placed throughout the room.