A vehicular sound processing system includes a plurality of interior microphones that detect interior sound emanating from within the interior cabin of the vehicle, and a plurality of exterior microphones that detect exterior sound emanating from exterior the vehicle. The interior microphones also detect exterior sound. A sound processor processes exterior microphone signals to determine exterior sound detected by the exterior microphones. The sound processor processes interior microphone signals to distinguish voices of occupants present within the interior cabin from non-vocal sound emanating from within the interior cabin and from exterior sound emanating from exterior the vehicle. The sound processor processes the exterior microphone signals to determine a sound of interest emanating from exterior of the vehicle. Responsive to determination of the sound of interest, the sound of interest is played by loudspeakers so that a driver of the vehicle can hear the sound of interest.