Abstract: A system for generating loudspeaker-ready binaural signals comprises a tracking system for detecting the position and, preferably, the angle of rotation of a listener's head; and means, responsive to the head-tracking means, for generating the binaural signal. The system may also include a crosstalk canceller responsive to the tracking system, and which adds to the binaural signal a crosstalk cancellation signal based on the position (and/or the rotation angle) of the listener's head. The invention may also address the high-frequency components not generally affected by the crosstalk canceller by considering these frequencies in terms of power (rather than phase). By implementing the compensation in terms of power levels rather than phase adjustments, the invention avoids the shortcomings heretofore encountered in attempting to cancel high-frequency crosstalk.