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We describe a system for separating multiple sources from a two-channel recording based on interaural cues and known characteristics of the source signals. We combine a probabilistic model of the observed interaural level and phase differences with a prior model of the source statistics and derive an EM algorithm for finding the maximum likelihood parameters of the joint model. The system is able to separate more sound sources than there are observed channels. In simulated reverberant mixtures of three speakers the proposed algorithm gives a signal-to-noise ratio improvement of 2.1 dB over a baseline algorithm using only interaural cues.