Informational masking of water sounds has been proven effective in mitigating traffic noise perception with different sound levels and signal-to-noise ratios, but less is known about the effects of the spatial distribution of water sounds on the perception of the surrounding environment and corresponding psychophysical responses. Three different spatial settings of water-sound sequences with a traffic noise condition were used to investigate the role of spatialization of water-sound sequences on traffic noise perception. The neural responses of 20 participants were recorded by a portable electroencephalogram (EEG) device during the spatial sound playback time. The mental effects and attention process related to informational masking were assessed by the analysis of the EEG spectral power distribution and sensor-level functional connectivity along with subjective assessments. The results showed higher relative power of the alpha band and greater alpha-beta ratio among water-sound sequence conditions compared to traffic noise conditions, which confirmed the increased relaxation on the mental state induced by the introduction of water sounds. Moreover, different spatial settings of water-sound sequences evoked different cognitive network responses. The setting of two-position switching water brought more attentional network activations than other water sequences related to the information masking process along with more positive subjective feelings.