An audio system provides for spatial enhancement, crosstalk processing, and crosstalk compensation of an input audio signal. The crosstalk compensation compensates for spectral defects caused by the application of the crosstalk processing to a spatially enhanced signal. The crosstalk compensation may be performed prior to the crosstalk processing, after the crosstalk processing, or in parallel with the crosstalk processing. The crosstalk compensation includes applying filters to the mid and side components of the left and right input channels to compensate for spectral defects from crosstalk processing of the audio signal. The crosstalk processing may include crosstalk simulation or crosstalk cancellation. In some embodiments, the crosstalk compensation may be integrated with a subband spatial processing that spatially enhances the audio signal.