A desired acoustic signal is extracted from a noisy environment by generating a signal representative of the desired signal with a processor for a hearing aid device. The processor receives binaural signals from two microphones at different locations. The binaural inputs to the processor are converted from analog to digital format and then submitted to a discrete Fourier transform process to generate discrete spectral signal representations. The spectral signals are delayed by a number of time intervals in a dual delay line to provide a number of intermediate signals, each corresponding to a different position relative to a desired signal source. Location of the noise source is determined and the spectral content of the desired signal is determined from the intermediate signal corresponding to the noise source location. Inverse transformation of the selected intermediate signal followed by digital to analog conversion provides an output signal representative of the desired signal.