Binaural interaction occurs in the auditory evoked potentials when the sum of the monaural auditory evoked potentials are not equivalent to the binaural evoked auditory potentials. Binaural interaction of the early- (0-10 ms), middle- (10-50 ms) and long-latency (50-200 ms) auditory evoked potentials was studied in 17 normal young adults. For the early components, binaural interaction was maximal at 7.35 ms accounting for a reduction of 21% of the amplitude of the binaural evoked potentials. For the middle latency auditory evoked potentials, binaural interaction was maximal at 39.6 ms accounting for a reduction of 48% of the binaural evoked potential. For the long-latency auditory evoked potentials, binaural interaction was maximal at 145 ms accounting for a reduction of 38% of the binaural evoked potential. In all of the auditory evoked potentials binaural interaction was long lasting around the maxima. The binaural interaction component extends for several milliseconds in the brainstem to tens of milliseconds in the middle- and long-latency components. Binaural interaction takes the form of a reduction of amplitude of the binaural evoked potential relative to the sum of the monaural responses, suggests that inhibitory processes are represented in binaural interaction using evoked potentials. Binaural processing in the auditory pathway is maximal in the time domain of the middle-latency components reflecting activity in the thalamo-cortical portions of the auditory pathways.