In the occlusion illusion, the visible portion of a partly occluded object appears larger than a physically identical nonoccluded region. Stereoscopic displays allowed for a direct test of the apparent-distance hypothesis. In Experiments 1A and 1B, we measured both the perceived size and the perceived depth of partly occluded targets when the binocular disparity of both targets and occluders was varied. Stereoscopic occlusion greatly increased perceived target size but not perceived target distance. A reduced illusion was still present when the target was stereoscopically in front of the abutting rectangle, however. Experiments 2A and 2B showed similar results, even when the occluding figures were illusory rectangles that formed no explicit T-junctions. Experiment 3 showed that an unexpected negative size illusion on control trials was primarily due to adaptation to the occlusion illusion on other trials. The present findings eliminate apparent-distance explanations of the occlusion illusion but are consistent with other hypotheses, such as partial modal completion and selective dimensional expansion.