When a figure discretely and instantaneously changes its shape, observers typically do not perceive the abrupt transition between shapes that in fact occurs. Rather, a continuous shape change is perceived. Although this illusory "transformational apparent motion" (TAM) is a faulty construction of the visual system, it is not arbitrary. From the many possible shape changes that could have been inferred, usually just one is perceived because only one is consistent with the shape-based rules that the visual system uses to (1) segment figures from one another within a scene and (2) match figures to themselves across successive scenes. TAM requires an interaction between neuronal circuits that process form relationships with circuits that compute motion trajectories. In particular, this form-motion interaction must happen before TAM is perceived because the direction of perceived motion is dictated by form relationships among figures in successive images. The present fMRI study (n = 19) provides the first evidence that both form (LOC, posterior fusiform gyrus) and motion (hMT+) processing areas are more active when TAM is perceived than in a control stimulus where it is not. Retinotopic areas (n = 10), hMT+ (n = 7), and LOC (n = 7) were mapped in a subset of subjects. Results: There is greater BOLD response to TAM than to the control condition in V1 and all subsequent retinotopic areas, as well as in hMT+ and the LOC, suggesting that areas that process form interact with hMT+ to construct the perception of moving figures. (c) 2006 Elsevier Inc. All rights reserved.