IPD or Interaural Phase Difference refers to the difference in the phase of a wave that reaches each ear, and is dependent on the frequency of the sound wave and the interaural time differences (ITD). Imagine a 1,000Hz tone that reaches the left ear 0.5ms before the right ear. As the wave reaches the right ear, it will be 180 degrees out of phase with the wave at the left ear. IPD is essential as the human ear has the ability to detect differences as small as three degrees, and the combination of IPD and ITD, not only aids the listener in determining where the sound stimuli originated from, but also helps identify the frequency of the sound.
Once the brain has analyzed IPD, ITD, and IID (Interaural Intensity Difference), the location of the sound source can be determined with relative accuracy.