In a two‐interval, forced‐choice task, observers discriminated a binaural noise whose interaural correlation r varied according to the function r(t) = m cos 2π fmt from an interaurally uncorrelated noise [NU; r(t) = 0.0]. The former stimulus produces a perceptual binaural ’’flutter,’’ where the flutter rate is equal to the modulation frequency fm, and the amount of flutter corresponds to m. The stimuli were 0.4‐octave‐wide Gaussian noises with center frequencies of 500, 1000, 2000, or 4000 Hz. Presentation levels were 70–75 dB SPL; duration was 1.0 s. For a given modulation frequency, the peak interaural correlation m was varied in a blocked procedure, and thresholds were estimated as that value of m required for 75% discriminability. Plotting thresholds as a function of fm yields a modulation function, which can be interpreted as an ’’attenuation characteristic’’ of the binaural system. For the 500‐Hz stimulus, thresholds increased from m = 0.28 at fm = 1 Hz to m = 0.80 at fm = 50 Hz. For higher frequency stimuli, discrimination was generally poorer and the modulation functions were flatter: thus, for 2000 Hz, m = 0.54 at fm = 1 Hz and m = 0.71 at fm = 20 Hz; for 4000 Hz, m = 0.71 at fm = 1 Hz and m = 0.81 at fm = 10 Hz. The modulation function from an ’’ideal observer’’ (at 500 Hz) differed in both form and absolute level from those of real observers. The data are discussed in relation to previous work on dynamic binaural processing.