Presenting an intense (e.g., 80-dB [SPL]) "transient" (e.g., 50-msec) inducer to the ear reduces the loudness of subsequent signals at or near the frequency of the inducer. In this study, we ask whether similar inducers also affect lateralization. In two experiments, we asked how inducing tones presented to one ear (the exposed ear) affect judgments of the lateral position of subsequent target tones having various interaural intensity differences. In Experiment 1, inducers had the same frequency as the targets, and, as predicted, reduced the tendency to lateralize the targets to the exposed ear. In Experiment 2, the frequency of the inducers and the target differed (different critical bands), thereby eliminating the effect on lateralization. These results are consistent with the hypothesis that inducers temporarily reduce the magnitude of the representation of intensity signals in the frequency region around them and that this reduction occurs, at least partly, peripherally to the site at which binaural intensity differences are encoded. The results imply further that the reduction in loudness previously reported under similar stimulus conditions reflects a more general reduction of intensity-based information in hearing.