Abstract: We present novel algorithms for modeling interactive diffuse reflections and higher-order diffraction in large-scale virtual environments. Our formulation is based on ray-based sound propagation and is directly applicable to complex geometric datasets. We use an incremental approach that combines radiosity and path tracing techniques to iteratively compute diffuse reflections. We also present algorithms for wavelength-dependent simplification and visibility graph computation to accelerate higher-order diffraction at runtime. The overall system can generate plausible sound effects at interactive rates in large, dynamic scenes that have multiple sound sources. We highlight the performance in complex indoor and outdoor environments and observe an order of magnitude performance improvement over previous methods.