Time-of-flight (TOF) PET uses very fast detectors to improve localization of events along coincidence lines-of-response. This information is then utilized to improve the tomographic reconstruction. This work evaluates the effect of TOF upon an observer's performance for detecting and localizing focal warm lesions in noisy PET images. An advanced anthropomorphic lesion-detection phantom was scanned 12 times over 3 days on a prototype TOF PET/CT scanner (Siemens Medical Solutions). The phantom was devised to mimic whole-body oncologic (18)F-FDG PET imaging, and a number of spheric lesions (diameters 6-16 mm) were distributed throughout the phantom. The data were reconstructed with the baseline line-of-response ordered-subsets expectation-maximization algorithm, with the baseline algorithm plus point spread function model (PSF), baseline plus TOF, and with both PSF+TOF. The lesion-detection performance of each reconstruction was compared and ranked using localization receiver operating characteristics (LROC) analysis with both human and numeric observers. The phantom results were then subjectively compared to 2 illustrative patient scans reconstructed with PSF and with PSF+TOF. Inclusion of TOF information provides a significant improvement in the area under the LROC curve compared to the baseline algorithm without TOF data (P = 0.002), providing a degree of improvement similar to that obtained with the PSF model. Use of both PSF+TOF together provided a cumulative benefit in lesion-detection performance, significantly outperforming either PSF or TOF alone (P < 0.002). Example patient images reflected the same image characteristics that gave rise to improved performance in the phantom data. Time-of-flight PET provides a significant improvement in observer performance for detecting focal warm lesions in a noisy background. These improvements in image quality can be expected to improve performance for the clinical tasks of detecting lesions and staging disease. Further study in a large clinical population is warranted to assess the benefit of TOF for various patient sizes and count levels, and to demonstrate effective performance in the clinical environment.