This paper evaluates the influence of three multimicrophone noise reduction algorithms on the ability to localize sound sources. Two recently developed noise reduction techniques for binaural hearing aids were evaluated, namely, the binaural multichannel Wiener filter (MWF) and the binaural multichannel Wiener filter with partial noise estimate (MWF-N), together with a dual-monaural adaptive directional microphone (ADM), which is a widely used noise reduction approach in commercial hearing aids. The influence of the different algorithms on perceived sound source localization and their noise reduction performance was evaluated. It is shown that noise reduction algorithms can have a large influence on localization and that (a) the ADM only preserves localization in the forward direction over azimuths where limited or no noise reduction is obtained; (b) the MWF preserves localization of the target speech component but may distort localization of the noise component. The latter is dependent on signal-to-noise ratio and masking effects; (c) the MWF-N enables correct localization of both the speech and the noise components; (d) the statistical Wiener filter approach introduces a better combination of sound source localization and noise reduction performance than the ADM approach.