Animals that are small compared to sound wavelengths face the challenge of localizing a sound source since the main cues to sound direction-interaural time differences (ITD) and interaural level differences (ILD)-both depend on size. Remarkably, the majority of terrestrial vertebrates possess internally coupled ears (ICE) with an air-filled cavity connecting the two eardrums and producing an inherently directional middle-ear system. Underwater, longer wavelengths and faster sound-speed reduce both ITD and ILD cues. Nonetheless, many animals communicate through and localize underwater sound. Here, a typical representative equipped with ICE is studied: the fully aquatic clawed frog Xenopus laevis. It is shown that two factors improve underwater sound-localization quality. First, inflated lungs function as Helmholtz resonator and generate directional amplitude differences between eardrum vibrations in the high-frequency (1.7-2.2 kHz) and low-frequency (0.8-1.2 kHz) range of the male advertisement calls. Though the externally arriving ILDs practically vanish, the perceived internal level differences are appreciable, more than 10 dB. As opposed to, e.g., lizards with thin and flexible eardrums, plate-like eardrums are shown to be Xenopus' second key to successfully handling aquatic surroundings. Based on ICE, both plate-like eardrums and inflated lungs functioning as Helmholtz resonators explain the phonotaxis performance of Xenopus.