Abstract: The mechanism of auditory localization is an important topic on psychoacoustics and physiological acoustics. It also plays a vital role on spatial sound technique. Auditory localization is the consequence of cooperation of multiple cues, but the information provided by various cues is somewhat redundant. The mechanism of lateral localization is relatively clear. Both interaural time difference and interaural level difference contribute to lateral localization, especially the former at low frequency is dominant. In contrast, some problems on the mechanism of front-back and vertical localization should be addressed and clarified. It is already known that both individualized spectral cue and dynamic cue caused by head turning provide information for front-back and vertical localization. Since Wallach proposed the classical hypothesis in 1940, there have been a series of experiment that validated the effect of dynamic cue. However, the contribution of dynamic cue, especially the contribution to vertical localization, is often underestimated, and the spectral cue is generally regarded as the dominant one. The mechanism of auditory localization is essential to spatial sound technique. However, based on inappropriate psychoacoustic hypothesis, it is impossible to explain some important experimental results and solve some general problems, resulting in misunderstanding in the development of spatial sound technique. Recently, many problems in spatial sound technique are closely related to dynamic cue. In this article, the researches and recent progresses on dynamic auditory localization cues, especially a series of related works by international and the author’s groups, are reviewed. The mechanism of dynamic auditory localization cue is applied to address some general problems and clarify the misunderstanding on spatial sound, including Ambisonics, multichannel sound and virtual auditory display. Some problems to be solved and prospects are also discussed.