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Sound localization testing is key for comprehensive hearing evaluations, particularly in cases of suspected auditory processing disorders. However, sound localization is not commonly assessed in clinical practice, likely due to the complexity and size of conventional measurement systems, which require semicircular loudspeaker arrays in large and acoustically treated rooms. To address this issue, we investigated the feasibility of testing sound localization in virtual reality (VR). Previous research has shown that virtualization can lead to an increase in localization blur. To measure these effects, we conducted a study with a group of normal-hearing adults, comparing sound localization performance in different augmented reality and VR scenarios. We started with a conventional loudspeaker-based measurement setup and gradually moved to a virtual audiovisual environment, testing sound localization in each scenario using a within-participant design. The loudspeaker-based experiment yielded results comparable to those reported in the literature, and the results of the virtual localization test provided new insights into localization performance in state-of-the-art VR environments. By comparing localization performance between the loudspeaker-based and virtual conditions, we were able to estimate the increase in localization blur induced by virtualization relative to a conventional test setup. Notably, our study provides the first proxy normative cutoff values for sound localization testing in VR. As an outlook, we discuss the potential of a VR-based sound localization test as a suitable, accessible, and portable alternative to conventional setups and how it could serve as a time- and resource-saving prescreening tool to avoid unnecessarily extensive and complex laboratory testing.