The ability to process and act upon incoming sounds during locomotion is critical for survival. Intriguingly, sound responses of auditory cortical neurons are on average weaker during locomotion as compared to immobility and these results have been suggested to reflect a computational resource allocation shift from auditory to visual processing. However, the evolutionary benefit of this hypothesis remains unclear. In particular, whether weaker sound-evoked responses during locomotion indeed reflect a reduced involvement of the auditory cortex, or whether they result from an alternative neural computation in this state remains unresolved. To address this question, we first used neural inactivation in behaving mice and found that the auditory cortex plays a critical role in sound-guided behavior during locomotion. To investigate the nature of this processing, we used two-photon calcium imaging of local excitatory auditory cortical neural populations in awake mice. We found that underlying a net inhibitory effect of locomotion on sound-evoked response magnitude, spatially intermingled neuronal subpopulations were differentially influenced by locomotion. Further, the net inhibitory effect of locomotion on sound-evoked responses was strongly shaped by elevated ongoing activity. Importantly, rather than reflecting enhanced “noise”, this ongoing activity reliably encoded the animal’s locomotion speed. Prediction analyses revealed that sound, locomotive state and their integration are strongly encoded by auditory cortical ensemble activity. Finally, we found consistent patterns of locomotion-sound integration in electrophysiologically recorded activity in freely moving rats. Together, our data suggest that auditory cortical ensembles are not simply suppressed by locomotion but rather encode it alongside sound information to support sound perception during locomotion.