A series of experiments was performed to examine the extent to which precision of interaural time discrimination depends on the sound‐pressure level (SPL) and/or sensation level (SL) of the signal. All experiments used a tone burst signal and a continuous white noise masker, which was either diotic or interaurally phase reversed. Results of the first experiment indicate that (1) at equal signal SLs, interaural time and intensity discrimination is more precise when measured with the added diotic noise, and (2) addition of the phase reversed noise, previously shown to cause less precise interaural time discrimination, has a similar effect on interaural intensity discrimination. In the second experiment, interaural time JNDs for a signal of constant SPL were measured as a function of noise level. Results show that a low‐level diotic noise can benefit interaural time discrimination, particularly at 500 Hz. The third and fourth experiments were performed to measure interaural time discrimination as a function of increasing signal SPL but constant signal‐to‐noise ratio. The data show the JND decreasing with increasing signal SPL at nearly the same rate with or without the added noise, indicating that an increase in signal‐to‐noise ratio is not necessary for improved discrimination.