The head-related transfer function (HRTF) of the cat adds directionally dependent energy minima to the amplitude spectrum of complex sounds. These spectral notches are a principal cue for the localization of sound source elevation. Physiological evidence suggests that the dorsal cochlear nucleus (DCN) plays a critical role in the brainstem processing of this directional feature. Type O units in the central nucleus of the inferior colliculus (ICC) are a primary target of ascending DCN projections and, therefore, may represent midbrain specializations for the auditory processing of spectral cues for sound localization. Behavioral studies confirm a loss of sound orientation accuracy when DCN projections to the inferior colliculus are surgically lesioned. This study used simple analogs of HRTF notches to characterize single-unit response patterns in the ICC of decerebrate cats that may contribute to the directional sensitivity of the brain's spectral processing pathways. Manipulations of notch frequency and bandwidth demonstrated frequency-specific excitatory responses that have the capacity to encode HRTF-based cues for sound source location. These response patterns were limited to type O units in the ICC and have not been observed for the projection neurons of the DCN. The unique spectral integration properties of type O units suggest that DCN influences are transformed into a more selective representation of sound source location by a local convergence of wideband excitatory and frequency-tuned inhibitory inputs.