Based on the Varioscope, a commercially available head-mounted operating binocular, we have developed the Varioscope AR, a see through head-mounted display (HMD) for augmented reality visualization that seamlessly fits into the infrastructure of a surgical navigation system. We have assessed the extent to which stereoscopic visualization improves target localization in computer-aided surgery in a phantom study. In order to quantify the depth perception of a user aiming at a given target, we have designed a phantom simulating typical clinical situations in skull base surgery. Sixteen steel spheres were fixed at the base of a bony skull, and several typical craniotomies were applied. After having taken CT scans, the skull was filled with opaque jelly in order to simulate brain tissue. The positions of the spheres were registered using VISIT, a system for computer-aided surgical navigation. Then attempts were made to locate the steel spheres with a bayonet probe through the craniotomies using VISIT and the Varioscope AR as a stereoscopic display device. Localization of targets 4 mm in diameter using stereoscopic vision and additional visual cues indicating target proximity had a success rate (defined as a first-trial hit rate) of 87.5%. Using monoscopic vision and target proximity indication, the success rate was found to be 66.6%. Omission of visual hints on reaching a target yielded a success rate of 79.2% in the stereo case and 56.25% with monoscopic vision. Time requirements for localizing all 16 targets ranged from 7.5 min (stereo, with proximity cues) to 10 min (mono, without proximity cues). Navigation error is primarily governed by the accuracy of registration in the navigation system, whereas the HMD does not appear to influence localization significantly. We conclude that stereo vision is a valuable tool in augmented reality guided interventions.