Magnetoencephalographic responses to 40-Hz amplitude modulated tones of 4-s duration were recorded in young, middle aged and older healthy participants. Interaural phase difference (IPD) in the sound carrier was changed during stimulus presentation from 0 to 180 degrees, resulting in perceptual change from focal to spacious sound. The stimulus modulation elicited synchronized gamma band oscillations, the 40-Hz auditory steady-state response (ASSR). Equivalent current dipoles were localized in primary auditory cortices. Waveforms of cortical activity showed a decrement in ASSR amplitude 100 ms after stimulus IPD change and modification of ASSR phase, which was maximally 90 degrees, corresponding to 6 ms delay. Time courses of ASSR phase deviation constituted a novel auditory response. The amount of ASSR phase change decreased with increasing stimulus frequency and revealed upper limits for physiological IPD detection. Thresholds for IPD detection were found close to 1500 Hz in the young, around 1250 Hz in middle-aged and around 1000 Hz in the older group. Whereas the ASSR change response revealed aging related decline of binaural hearing, the amplitude of 40-Hz response and the size of the ASSR change response were not affected by aging. Additional ASSR change responses were recorded at high rate of stimulus changes every 400 ms. ASSR response detection at this rate was superior to response detection based on the auditory evoked P1-N1-P2 response. Responses to changes from focal to spacious sound were larger than in reverse direction. The ASSR were interpreted in relation to oscillatory gamma band activity representing auditory object representation.