Listening to and understanding people in a “cocktail-party situation” is a remarkable feature of the human auditory system. Here we investigated the neural correlates of the ability to localize a particular sound among others in an acoustically cluttered environment with healthy subjects. In a sound localization task, five different natural sounds were presented from five virtual spatial locations during functional magnetic resonance imaging (fMRI). Activity related to auditory stream segregation was revealed in posterior superior temporal gyrus bilaterally, anterior insula, supplementary motor area, and frontoparietal network. Moreover, the results indicated critical roles of left planum temporale in extracting the sound of interest among acoustical distracters and the precuneus in orienting spatial attention to the target sound. We hypothesized that the left-sided lateralization of the planum temporale activation is related to the higher specialization of the left hemisphere for analysis of spectrotemporal sound features. Furthermore, the precuneus − a brain area known to be involved in the computation of spatial coordinates across diverse frames of reference for reaching to objects − seems to be also a crucial area for accurately determining locations of auditory targets in an acoustically complex scene of multiple sound sources. The precuneus thus may not only be involved in visuo-motor processes, but may also subserve related functions in the auditory modality.