We describe a new theory explaining the perception of partly occluded objects and illusory figures, from both static and kinematic information, in a unified framework. Three ideas guide our approach. First, perception of partly occluded objects, perception of illusory figures, and some other object perception phenomena derive from a single boundary interpolation process. These phenomena differ only in respects that are not part of the unit formation process, such as the depth placement of units formed. Second, unit formation from static and kinematic information can be treated in the same general framework. Third, spatial and spatiotemporal discontinuities in the boundaries of optically projected areas are fundamental to the unit formation process. Consistent with these ideas, we develop a detailed theory of unit formation that accounts for most cases of boundary perception in the absence of local physical specification. According to this theory, discontinuities in the first derivative of projected edges are initiating conditions for unit formation. A formal notion of relatability is defined, specifying which physically given edges leading into discontinuities can be connected to others by interpolated edges. Intuitively, relatability requires that two edges be connectable by a smooth, monotonic curve. The roots of the discontinuity and relatability notions in ecological constraints on object perception are discussed. Finally, we elaborate our approach by discussing related issues, some new phenomena, connections to other approaches, and issues for future research. © 1991.