We try to explain perceptual continuation and depth in the visual-phantom illusion in terms of perceptual transparency. Perceptual continuation of inducing gratings across the occluder in stationary phantoms could be explained with unique transparency, a notion proposed by Anderson (1997 Perception 26 419-453). This view is consistent with a number of previous reports including that of McCourt (1994 Vision Research 34 1609-1617) who criticized the stationary phantom illusion from the viewpoint of his counterphase lightness induction or grating induction, which might involve invalid transparency. Here we confirm that the photopic phantom illusion (Kitaoka et al, 1999 Perception 28 825-834) really gives in-phase lightness induction and involves bistable transparency. It is thus suggested that perceptual continuation and depth in the visual-phantom illusion depend on perceptual transparency.