Performance on a shape discrimination task was used to investigate when, and to what extent, illusory contour formation depends upon contrast polarity. It was found that shape discrimination performance was markedly worse when contrast polarity reversed within inducers, changing abruptly at the corners, than between inducers. This difference was most evident for stimulus durations from 80-320 ms and corresponded to a doubling of the critical stimulus duration for shape discrimination to reach threshold. At longer stimulus durations the performance was at ceiling level for all configurations regardless of the distribution of contrast polarity variations. These data reconcile previous findings that contrast polarity reversals within inducers disrupt illusory contrast formation at an effective stimulus duration of 120 ms but not 1 s. We conclude that the processes involved in the perception of illusory figures are sensitive to contrast polarity variations in a manner constrained by grouping and completion of the inducing elements into occluded regions.