The location and motion of sounds in space are important cues for encoding the auditory world. Spatial processing is a core component of auditory scene analysis, a cognitively demanding function that is vulnerable in Alzheimer's disease. Here we designed a novel neuropsychological battery based on a virtual space paradigm to assess auditory spatial processing in patient cohorts with clinically typical Alzheimer's disease (n = 20) and its major variant syndrome, posterior cortical atrophy (n = 12) in relation to healthy older controls (n = 26). We assessed three dimensions of auditory spatial function: externalized versus non-externalized sound discrimination, moving versus stationary sound discrimination and stationary auditory spatial position discrimination, together with non-spatial auditory and visual spatial control tasks. Neuroanatomical correlates of auditory spatial processing were assessed using voxel-based morphometry. Relative to healthy older controls, both patient groups exhibited impairments in detection of auditory motion, and stationary sound position discrimination. The posterior cortical atrophy group showed greater impairment for auditory motion processing and the processing of a non-spatial control complex auditory property (timbre) than the typical Alzheimer's disease group. Voxel-based morphometry in the patient cohort revealed grey matter correlates of auditory motion detection and spatial position discrimination in right inferior parietal cortex and precuneus, respectively. These findings delineate auditory spatial processing deficits in typical and posterior Alzheimer's disease phenotypes that are related to posterior cortical regions involved in both syndromic variants and modulated by the syndromic profile of brain degeneration. Auditory spatial deficits contribute to impaired spatial awareness in Alzheimer's disease and may constitute a novel perceptual model for probing brain network disintegration across the Alzheimer's disease syndromic spectrum.