Theoretical studies suggest that primary visual cortex (area V1) uses a sparse code to efficiently represent natural scenes. This issue was investigated by recording from V1 neurons in awake behaving macaques during both free viewing of natural scenes and conditions simulating natural vision. Stimulation of the nonclassical receptive field increases the selectivity and sparseness of individual V1 neurons, increases the sparseness of the population response distribution, and strongly decorrelates the responses of neuron pairs. These effects are due to both excitatory and suppressive modulation of the classical receptive field by the nonclassical receptive field and do not depend critically on the spatiotemporal structure of the stimuli. During natural vision, the classical and nonclassical receptive fields function together to form a sparse representation of the visual world. This sparse code may be computationally efficient for both early vision and higher visual processing.