At early stages in visual processing cells respond to local stimuli with specific features such as orientation and spatial frequency. Although the receptive fields of these cells have been thought to be local and independent, recent physiological and psychophysical evidence has accumulated, indicating that the cells participate in a rich network of local connections. Thus, these local processing units can integrate information over much larger parts of the visual field; the pattern of their response to a stimulus apparently depends on the context presented. To explore the pattern of lateral interactions in human visual cortex under different context conditions we used a novel chain lateral masking detection paradigm, in which human observers performed a detection task in the presence of different length chains of high-contrast-flanked Gabor signals. The results indicated a nonmonotonic relation of the detection threshold with the number of flankers. Remote flankers had a stronger effect on target detection when the space between them was filled with other flankers, indicating that the detection threshold is caused by dynamics of large neuronal populations in the neocortex, with a major interplay between excitation and inhibition. We considered a model of the primary visual cortex as a network consisting of excitatory and inhibitory cell populations, with both short- and long-range interactions. The model exhibited a behavior similar to the experimental results throughout a range of parameters. Experimental and modeling results indicated that long-range connections play an important role in visual perception, possibly mediating the effects of context.