We used functional imaging of normal subjects to identify the neural substrate for the perception of voices in external auditory space. This fundamental process can be abnormal in psychosis, when voices that are not true external auditory objects (auditory verbal hallucinations) may appear to originate in external space. The perception of voices as objects in external space depends on filtering by the outer ear. Psychoses that distort this process involve the cerebral cortex. Functional magnetic resonance imaging was carried out on 12 normal subjects using an inside-the-scanner simulation of 'inside head' and 'outside head' voices in the form of typical auditory verbal hallucinations. Comparison between the brain activity associated with the two conditions allowed us to test the hypothesis that the perception of voices in external space ('outside head') is subserved by a temperoparietal network comprising association auditory cortex posterior to Heschl's gyrus [planum temporale (PT)] and inferior parietal lobule. Group analyses of response to 'outside head' versus 'inside head' voices showed significant activation solely in the left PT. This was demonstrated in three experiments in which the predominant lateralization of the stimulus was to the right, to the left or balanced. These findings suggest a critical involvement of the left PT in the perception of voices in external space that is not dependent on precise spatial location. Based on this, we suggest a model for the false perception of externally located auditory verbal hallucinations.