If the central portion of a vertical grating is covered up by an opaque horizontal occluder, a phantom grating is perceived to continue across the occluded region. The phantoms can be seen even if the inducing grating is stationary, but are not seen when the occluder luminance is near to the space-average luminance of the grating. Optimal occluder luminance for the perception of phantoms was measured, while occluder height and the inducing grating contrast varied. Phantom visibility was maximal when the occluder luminance was near to either the minimum or to the maximum luminance of the grating. When the occluder luminance was set between the two levels, opposite-phase illusory gratings were dominantly observed. The reciprocal relationship between the visual phantoms and the grating induction effect of McCourt (1982) is discussed.