In spatial audio reproduction with sound projection, instead of placing loudspeakers in specific directions, virtual sources are created by projecting sound on reflective boundaries. The projected sound should dominate the localization. One limiting factor is the leading direct sound occurring because of physical limitations of the focusing capabilities of sound projectors. In this paper, localization masking, a method to reduce the influence of this direct sound on localization, is introduced. Localization masking was investigated in an anechoic chamber with cascaded lead-lag pairs representing the sounds involved. The sounds were reproduced via individual loudspeakers. Natural percussion signals with transient temporal structures were used. The lag localization dominance threshold, defined as the maximum lead level at which the direction of the auditory events is in the direction of the lag, was measured using a method of adjustment. Localization masking caused this threshold to shift to up to a 7-dB higher lead level. Therefore localization masking reduced the influence of the initial lead, representing the direct sound, on localization. In practical sound projection scenarios, localization masking may improve the projection of signals with transient structures or reduce the requirements on the focusing capabilities of sound projectors that are used to project such signals.