A wearable electronic device includes a microphone array, stereo speakers and a control circuit. The microphone array is configured for sensing an environmental sound. The control circuit is coupled to the microphone array and the speaker. The control circuit is operable to calculate a distance and a directional angle from a source of the environmental sound to the wearable electronic device according to the environmental sound sensed by the microphone array, to generate an effect sound corresponding to the environmental sound, to process the effect sound for simulating the effect sound to be originated from a virtual location with the distance and the directional angle relative to the wearable electronic device, and to broadcast the processed effect sound through the pair of speakers.