The effects of internal waves on low-frequency (25 Hz) narrow-band source localization performance are investigated at a very long range (1000 km). Sound-speed perturbations induced by internal waves obeying the Garrett–Munk spectral model are incorporated into the normal mode solution to the wave equation using the adiabatic approximation. Sensitivity of source localization on the internal wave modal content is examined. For the entire range of signal-to-noise ratios (SNR) and degrees of internal-wave field structure, the optimal uncertain field processor (OUFP) provides both the signal processing algorithm as well as the limitations on source localization performance. For high SNR, the localization errors are local and the performance level of the OUFP is predicted by the hybrid Cramer–Rao lower bound (CRLB). In fairly structured internal-wave environments, significant performance gains are made optimally localizing the source. Under very random internal-wave environments, the environmental variability limits the performance of all signal processing algorithms.