The lateralization model of Masking‐Level Differences (MLDs) asserts that detection in those binaural conditions that produce an MLD is directly related to the perception of lateral space. The model was tested here by obtaining subjective reports of the lateral place of dichotic and diotic signals in noise which were in turn used by an “ideal observer” to determine the discriminability of the two classes of stimuli. The results support the model, showing that an observer using no information other than the lateralization judgments could detect NOSM in the dichotic condition as well as a subject who hear the acoustic stimuli.