In order to enhance fidelity and reduce confusion through compensation of vision, it is necessary to investigate three-dimensional acoustic simulation over headphones based on virtual environments. Localization cues that can provide positional infor mation such as head-related transfer function, in teraural time difference, and interaural intensity difference, play an important role in three-dimen sional acoustic simulation. Audio signal processing based on wavelet transform and Huffman encoding reduces data storage and transmission to meet lower bit rate requirements in interactive environments. Visual and aural fusion through a synchronic con trol mechanism make acoustic simulation environ ments closer to the natural world to achieve the goal of three-dimensional acoustic simulation based on virtual environments. Psychoacoustic tests of acous tic simulation based on virtual environments dem onstrate that this simulation method is efficient and reliable.