Issue localization, the process of identifying code locations that need modification to resolve software issues, is a critical yet challenging task in software development. The semantic gap between natural language issue descriptions and faulty code requires complex multi-hop reasoning through code dependencies. Existing LLM-based agents attempt to address this by integrating repository retrieval tools, which poses a higher demand for LLMs to effectively utilize various tools during multi-step reasoning for issue localization. To tackle this challenge, we present ToolTrain, a two-stage tool-interactive training framework combining rejection-sampled supervised fine-tuning and tool-interactive reinforcement learning to enhance LLMs’ ability to use retrieval tools for issue localization. Experimental results show that ToolTrain-trained models achieve state-of-the-art performance, with our 32B model even surpassing Claude-3.7 on function-level localization. The results also show that improved localization performance translates to better end-to-end issue resolution performance. This further demonstrates that training for issue localization is a viable and effective strategy for improving automated software development.