Sound localization relies on minute differences in the timing and intensity of sound arriving at both ears. Neurons of the lateral superior olive (LSO) in the brainstem process these interaural disparities by precisely detecting excitatory and inhibitory synaptic inputs. Aging generally induces selective loss of inhibitory synaptic transmission along the entire auditory pathways, including the reduction of inhibitory afferents to LSO. Electrophysiological recordings in animals, however, reported only minor functional changes in aged LSO. The perplexing discrepancy between anatomical and physiological observations suggests a role for activity-dependent plasticity that would help neurons retain their binaural tuning function despite loss of inhibitory inputs. To explore this hypothesis, we use a computational model of LSO to investigate mechanisms underlying the observed functional robustness against age-related loss of inhibitory inputs. The LSO model is an integrate-and-fire type enhanced with a small amount of low-voltage activated potassium conductance and driven with (in)homogeneous Poissonian inputs. Without synaptic input loss, model spike rates varied smoothly with interaural time and level differences, replicating empirical tuning properties of LSO. By reducing the number of inhibitory afferents to mimic age-related loss of inhibition, overall spike rates increased, which negatively impacted binaural tuning performance, measured as modulation depth and neuronal discriminability. To simulate a recovery process compensating for the loss of inhibitory fibers, the strength of remaining inhibitory inputs was increased. By this modification, effects of inhibition loss on binaural tuning were considerably weakened, leading to an improvement of functional performance. These neuron-level observations were further confirmed by population modeling, in which binaural tuning properties of multiple LSO neurons were varied according to empirical measurements. These results demonstrate the plausibility that homeostatic plasticity could effectively counteract known age-dependent loss of inhibitory fibers in LSO and suggest that behavioral degradation of sound localization might originate from changes occurring more centrally.