Virtual three-dimensional auditory displays (V3DADs) use digital signal processing to deliver sounds (typically through headphones) that seem to originate from specific external spatial locations. This set of studies investigates the delivery of V3DADs through bone-conduction transducers (BCTs) in addition to conventional headphones. Although previous research has shown that spatial separation can be induced through BCTs, some additional signal adjustments are required for optimization of V3DADs, due to the difference in hearing pathways. The present studies tested a bone-conduction adjustment function (BAF) derived from equal-loudness judgments on pure tones whose frequencies were spaced one critical band apart. Localization performance was assessed through conventional air-conduction headphones, BCTs with only transducer correction, and BCTs with a BAF. The results showed that in the elevation plane, the BAF was effective in restoring the spectral cues altered by the bone-conduction pathway. No evidence for increased percept variability or decreased lateralization in the bone-conduction conditions was found. These findings indicate that a V3DAD can be implemented on a BCT and that a BAF will improve performance, but that there is an apparent performance cost that cannot be addressed with BAFs measured using the methodology in the present studies.