The detection of signals in noise is important for understanding both the mechanisms of hearing and how the auditory system functions under more natural conditions. In humans, the auditory system gains some improvement if the signal and noise are separated in space (binaural masking release). Birds with small heads are at a disadvantage in separating noise and signal sources relative to large mammals, because interaural time differences are much smaller. Two binaural phenomena in budgerigars related to the detection of tones in noise were examined. Budgerigars show 8 dB of free-field binaural masking release when signal and noise are presented to their right side and correlated noise is presented to their left side. Budgerigars also show a spatial masking release of 9 dB when a signal and noise are separated in azimuth by 90 degrees. These results are similar to those found in humans and other mammals with much larger heads.