Contrast constancy is the ability to perceive object contrast independent of size or spatial frequency, even though these affect both retinal contrast and detectability. Like other perceptual constancies, it is evidence that the visual system infers the stable properties of objects from the changing properties of retinal images. Here it is shown that perceived contrast is based on an optimal thresholding estimator of object contrast, that is identical to the VisuShrink estimator used in wavelet denoising.