When the contrast of an image flickers as it moves, humans perceive an illusory reversal in the direction of motion. This classic illusion, called reverse-phi motion, has been well-characterized using psychophysics, and several models have been proposed to account for its effects. Here, we show that Drosophila melanogaster also respond behaviorally to the reverse-phi illusion and that the illusion is present in dendritic calcium signals of motion-sensitive neurons in the fly lobula plate. These results closely match the predictions of the predominant model of fly motion detection. However, high flicker rates cause an inversion of the reverse-phi behavioral response that is also present in calcium signals of lobula plate tangential cell dendrites but not predicted by the model. The fly's behavioral and neural responses to the reverse-phi illusion reveal unexpected interactions between motion and flicker signals in the fly visual system and suggest that a similar correlation-based mechanism underlies visual motion detection across the animal kingdom.