Interaural time differences in the envelope of a sound (envelope ITDs) can potentially provide spatial information at high frequencies where interaural phase differences (IPDs) are not available. Interaural intensity differences (IIDs) also provide important spatial information at high frequencies. Both IIDs and envelope ITDs can influence spatial perception at high frequencies, but behavioral and physiological studies suggest that IIDs dominate perception. This study examines envelope ITD sensitivity in the auditory cortex of the pallid bat, a species that uses passive sound localization at the low end of its audible range to find prey. Its auditory system is entirely 'high-frequency' in that phase-locking does not occur at the low end of its audible range. If the bat uses ITDs, they must be derived from the envelope of the signal. A previous study of envelope ITD sensitivity in its inferior colliculus (IC) reported that neurons are sensitive to the small +/-70 micros range of available ITDs. This study extends these findings to the cortical level to assess the transformation of ITD sensitivity and the binaural response properties that underlie this sensitivity. Two measures of sensitivity were used. The dynamic ITD range measures the range of ITDs over which the maximum response of a neuron decreases by 80%. When presented with square-wave amplitude-modulated tones statically delayed in arrival time, the average dynamic ITD range in the IC is 304 micros, but dropped to 175 micros in auditory cortex. IC neurons average a 38% change in maximum response over the relevant ITD range, while cortical neurons average a 67% change. Also measured were time-intensity trading ratios, which index the extent to which a change in IID can cause a shift the dynamic ITD range. Average trading ratios are approximately the same in the IC and auditory cortex (17.9 micros/dB vs. 16.7 micros/dB, respectively). Binaural interactions changed from the IC to auditory cortex. In IC, ITD sensitivity is an inhibitory, subtractive process in which ITDs reduce the response evoked by contralateral monaural stimulation. In the auditory cortex, both binaural inhibition and facilitation occur. In the majority of cortical neurons, IID and ITD functions were remarkably similar in shape, having stepped, step-peaked or peaked functions. The binaural interactions (inhibition and/or facilitation) evoked by ITDs and IIDs were also typically similar. These results suggest that IIDs and envelope ITDs are having similar effects on output of the same binaural comparator system.