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The mammalian auditory system contains descending neural pathways, some of which project onto the cochlea via the medial olivocochlear (MOC) system. The function of this efferent auditory system is not entirely clear. Behavioral studies in animals with olivocochlear (OC) lesions suggest that the MOC serves to facilitate sound localization in noise. In the current work, noise-induced OC activity (the OC reflex) and sound-localization performance in noise were measured in normal-hearing humans. Consistent with earlier studies, both measures were found to vary substantially across individuals. Importantly, significant correlations were observed between OC-reflex strength and the effect of noise on sound-localization performance; the stronger the OC reflex, the less marked the effect of noise. These results suggest that MOC activation by noise helps to counteract the detrimental effects of background noise on neural representations of direction-dependent spectral features, which are especially important for accurate localization in the up/down and front/back dimensions.