Flanked objects are difficult to identify using peripheral vision due to visual crowding, which limits conscious access to target identity. Nonetheless, certain types of visual information have been shown to survive crowding. Such resilience to crowding provides valuable information about the underlying neural mechanism of crowding. Here we ask whether illusory contour formation survives crowding of the inducers. We manipulated the presence of illusory contours through the (mis)alignment of the four inducers of a Kanizsa square. In the inducer-aligned condition, the observers judged the perceived shape (thin vs. fat) of the illusory Kanizsa square, manipulated by small rotations of the inducers. In the inducer-misaligned condition, three of the four inducers (all except the upper-left) were rotated 90°. The observers judged the orientation of the upper-left inducer. Crowding of the inducers worsened observers' performance significantly only in the inducer-misaligned condition. Our findings suggest that information for illusory contour formation survives crowding of the inducers. Crowding happens at a stage where the low-level featural information is integrated for inducer orientation discrimination, but not at a stage where the same information is used for illusory contour formation.