Abstract: We present an interactive sound propagation algorithm that can compute high orders of specular and diffuse reflections as well as edge diffractions in response to moving sound sources and a moving listener. Our formulation is based on a precomputed acoustic transfer operator, which we compactly represent using the Karhunen-Loeve transform. At runtime, we use a two-pass approach that combines acoustic radiance transfer with interactive ray tracing to compute early reflections as well as higher-order reflections and late reverberation. The overall approach allows accuracy to be traded off for improved performance at runtime, and has a low memory overhead. We demonstrate the performance of our algorithm on different scenarios, including an integration of our algorithm with Valve's Source game engine.