The nature of spatial representation in human auditory cortex remains elusive. In particular, although humans can discriminate the locations of sounds as close as 1–10 degrees apart, such resolution has not been shown in auditory cortex of humans or animals. We used the mismatch negativity (MMN) event related brain potential to measure the neural response to spatial change in humans in narrow 10 degree spatial steps. Twelve participants were tested using a dense array EEG setup while watching a silent movie and ignoring the sounds. The MMN was reliably elicited by infrequent changes of spatial location of sounds in free field. The MMN amplitude was linearly related to the degree of spatial change with a resolution of at least 10 degrees. These electrophysiological responses occurred within a window of 100–200 milliseconds from stimulus onset, and were localized to the posterior superior temporal gyrus. We conclude that azimuthal spatial displacement is rapidly, accurately and automatically represented in auditory sensory memory in humans, at the level of the auditory cortex.