-One form of cooperative behavior for a group of AUVs is to fly in formation while performing tasks. A necessary component for formation-flying is that the vehicles must sense their relative positions. Assuming that each vehicle is capable of sensing its inertial position using an acoustic long-baseline ranging system, the relative vehicle position can be determined by exchanging this data. The penalty for this approach is that exchanging inertial position data consumes communications bandwidth. Alternately, relative position may be obtained by intercepting acoustic ranging signals used to determine inertial position, obviating the need for exchange of position data. We explore the use of a two-hydrophone sensor to measure relative heading of two vehicles in a formation. It is assumed that a broad-band navigation signal emanating from one vehicle is intercepted by another vehicle containing the sensor. Relative heading is extracted from the time delay between the two hydrophones.Cross-correlation is used to determine time delay. A model is proposed that predicts stochastic precision and bias for the sensor. For a fixed ranging waveform, precision and bias are dependent upon signal-to-noise ratio, relative range and relative heading. This dependence means that the sensor will be most useful for certain combinations of range and heading. Measurements were performed to determine the precision of the two-hydrophone arrangement as a relative heading sensor. Simulations were used to explore the performance of formation-flying controllers that employ the two-hydrophone sensor.The controller used a saturating linear output feedback control law to simultaneously follow inertial waypoints and maintained formation. The simulations showed that this controller would be able to use relative heading provided by the two-hydrophone sensor to maintain formations in which the vehicles are approximately abreast.