The widely-used generic preference-based measures of health-related quality of life-the EuroQol Descriptive System (EQ-5D) and the Health Utilities Index (HUI3)-are limited in their response to technologies that improve hearing. The EQ-5D lacks construct validity for hearing, while the HUI3 is restricted by a ceiling effect and by using speech reception as the only evidence of the ability to hear. Consequently, neither measure consistently registers benefits from binaural hearing, such as those from bilateral versus unilateral cochlear implantation. The objectives were to test whether informants value binaural hearing, to develop a condition-specific preference-based measure sensitive to binaural hearing, to assess the psychometric properties of the new instrument, and to determine whether it meets requirements for informing judgments of cost-effectiveness: does it measure greater gains than do the generic preference-based measures, while avoiding exaggerating losses, and displaying sensitivity to side effects? Three levels of function, ranging from no difficulty to great difficulty, were defined on each of three dimensions where listening is easier or more successful when hearing is binaural rather than monaural: perception of speech in spatially separated noise, localization of sounds, and effort and fatigue. Informants (N = 203) valued the 27 combinations of levels and dimensions in a time trade-off task with a 10-year time frame to provide a value of binaural-related quality of life ("binaural utility") for each combination. A questionnaire was compiled to allow respondents to report their level of function on each dimension so that a value of binaural utility could be assigned to them. The questionnaire and the age-standardized valuations constitute The York Binaural Hearing-Related Quality-of-Life System (YBHRQL). Adult users of unilateral implants (N = 8), bilateral implants (N = 11), or bimodal aiding (N = 9) undertook performance tests of spatial listening and completed the HUI3, EQ-5D, and Speech, Spatial, and Qualities of Hearing (SSQ) questionnaires. They completed the YBHRQL questionnaire 24 and 38 mo later. Despite long intervals between measurements, the YBHRQL demonstrated desirable psychometric properties: good construct validity evidenced by significant correlations with performance measures and the SSQ index; a greater ability than the EQ-5D or HUI3 to distinguish unilateral, bimodal, and bilateral listening; and good reproducibility. The YBHRQL did not exaggerate losses of utility but was insensitive to a potential side effect of implantation (pain/discomfort). It measured a gain in utility from bilateral compared with unilateral implantation (median = 0.11, interquartile range, 0.03 to 0.16) that was greater than the gain measured by the EQ-5D (0.00, 0.00 to 0.00) but not the HUI3 (0.00, 0.00 to 0.17). The YBHRQL summarizes the contribution of binaural hearing to quality of life by combining the functional status of a listener with the preferences of independent informants. It would be an efficient clinical outcome measure. In addition, if used alongside the EQ-5D or HUI3, it would provide evidence which could beneficially modulate confidence in the cost-effectiveness of interventions. Further research on its sensitivity to side effects, and on the size of the gains in utility which it measures, is needed to determine whether it could stand alone to inform resource-allocation decisions.