In this paper, we proposed an algorithm for the approximation of high order FIR filters by low order IIR filters to efficient implementing two channel 3-D surround sound systems using Head-related transfer functions(HRTFs). The algorithm is based on a concept of the balanced model reduction. The binaural sounds using the approximated HRTFs are reproduced by headphone, and serves as a cue of sound image localization. HRTFs of dummy-head are approximated from 512-order FIR filters by 32-order IIR filters and compare with each other. .Experiment of sound image are carried out for 10 participants. We perform the experiment based on computer simulation and hardware experiment with TMS320C32. The results of the experiments show that the localization using the approximated HRTFs is the same accuracy as the case of FIR filters that simulate the HRTFs.