Our ability to localize low-frequency sounds relies on interaural time differences (ITD), the sensitivity to which underlies our ability to localize sound sources in azimuth and to segregate competing sound sources across a wide range of situations. However, the cortical representation of ITD has not been well characterized. To investigate differences in evoked cortical potentials and global functional connectivity during the unattended processing of sound localization on the horizontal plane, auditory mismatch negativity (MMN) was recorded and analyzed in adults using a deviant-standard oddball paradigm. A central sound source at the centerline of the horizontal plane (ITD = 0μs) was used as the standard stimulus and lateralized sounds with various ITDs were used as deviant stimuli. Characteristics of event-related potentials (ERP) and MMN obtained from young adults were compared between different deviant stimulus groups. The time-frequency (TF) power at each electrode associated with standard and deviant conditions were calculated. Distribution differences of electrode power between standard and deviant stimuli among oddball experiments were compared. Phase lag index (PLI) was also calculated to examine the dynamics of functional connectivity in various deviant stimulus groups. Network topological parameters were calculated to examine the global efficiency of information transfer in different deviant stimulus groups. Results of MMN analysis indicated that sounds with larger deviations from centerline elicited MMNs with greater amplitudes and shorter latencies and the MMN response was stronger in the hemisphere contralateral to the deviant stimulus. Results from the TF analysis showed a significant event-related synchronization (ERS) in the theta frequency band. Results of PLI functional connectivity suggested that the deviant stimulus resulted in a global increase in connectivity in theta band. Increased functional connectivity was found in frontal electrode pairs in sound stimuli towards the central rather than peripheral sound stimuli, and the peripheral sound stimuli revealed a higher global efficiency. This study suggests that the auditory system response in horizontal sound localization appeared to originate from the activity of the theta band. Sound sources with larger deviations from the centerline revealed higher brain network efficiency.