The term optical illusion refers to any illusion that deceives the human visual system into perceiving something that is not present or incorrectly perceiving what is present. There are physiological illusions and cognitive illusions.

Optical illusions can occur naturally or be demonstrated by specific visual tricks that show particular assumptions in the human perceptual system.

A mirage is an example of a natural illusion. The variation in the apparent distance of the Moon is another natural illusion. These are both examples of natural optical phenomena.

Developed or discovered illusions includes phenomena such as the Necker cube and the Hermann grid. Understanding these phenomena is useful in order to understand the limitations of the human visual system.

Physiological illusions, such as the afterimages following bright lights or adapting stimuli of prolonged alternating patterns (contingent perceptual after-effect, CAE), are the effects on the eyes of prolonged stimulation of a specific type - brightness, tilt, colour, movement and so on. The theory is that stimuli have individual dedicated neural paths in the visual cortex for the early stages of visual processing, repetitive stimulation of only a few channels misleads the visual system.

Cognitive illusions are more interesting and well-known. Instead of demonstrating a physiological base they interact with different levels of perceptual processing, in-built assumptions or 'knowledge' are misdirected. Cognitive illusions are commonly divided into ambiguous illusions, distorting illusions, paradox illusions or fiction illusions. They often exploit the predictive hypotheses of early visual processing.

Ambiguous illusions are pictures or objects that offer significant changes in appearance. Perception will 'switch' between the alternates as they are considered in turn as available data does not confirm a single view. The Necker cube is a well known example, the motion parallax due to movement is being misinterpreted, even in the face of other sensory data.

Distorting illusions are the most common, these illusions offer distortions of size, length or curvature. They were simple to discover and are easily repeatable. Many are physiological illusions, such as the Cafe wall illusion which exploits the early visual system encoding for edges. Other distortions, such as coverging line illusions, are more difficult to place as physiological or cognitive as the depth-cue challenges they offer are not easily placed. All pictures that have perspective cues are in effect illusions. Visual judgements as to size are controlled by perspective or other depth-cues and can easily be wrongly set.

Paradox illusions offer objects that are impossible or paradoxical, such as the Penrose triangle or impossible staircase seen, for example, in the work of M. C. Escher. The triangle is a illusion dependent on a cognitive misunderstanding that adjacent edges must join. They occur as a byproduct of perceptual learning.

Fiction illusions are the perception of objects that are genuinely not there to all but a single observer, such as those induced by schizophrenia or hallucinogenic drugs.

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