With the increasing realism of interactive applications, there is a growing need for harnessing additional sensory modalities such as hearing. While the synthesis and propagation of sounds in virtual environments has been explored, there has been little work that addresses sound localization and its integration into behaviors for autonomous virtual agents. This paper develops a framework that enables autonomous virtual agents to localize sounds in dynamic virtual environments, subject to distortion effects due to attenuation, reflection and diffraction from obstacles, as well as interference between multiple audio signals. We additionally integrate hearing into standard predictive collision avoidance techniques and couple it with vision to allow agents to react to what they see and hear, while navigating in virtual environments.