Lizards have highly directional ears, owing to strong acoustical coupling of the eardrums and almost perfect sound transmission from the contralateral ear. To investigate the neural processing of this remarkable tympanic directionality, we combined biophysical measurements of eardrum motion in the Tokay gecko with neurophysiological recordings from the auditory nerve. Laser vibrometry shows that their ear is a two-input system with approximately unity interaural transmission gain at the peak frequency (∼ 1.6 kHz). Median interaural delays are 260 μs, almost three times larger than predicted from gecko head size, suggesting interaural transmission may be boosted by resonances in the large, open mouth cavity (Vossen et al. 2010). Auditory nerve recordings are sensitive to both interaural time differences (ITD) and interaural level differences (ILD), reflecting the acoustical interactions of direct and indirect sound components at the eardrum. Best ITD and click delays match interaural transmission delays, with a range of 200-500 μs. Inserting a mold in the mouth cavity blocks ITD and ILD sensitivity. Thus the neural response accurately reflects tympanic directionality, and most neurons in the auditory pathway should be directional.