Physically unidirectional motion of short-lived random dot arrays was found to perceptually decompose into two motion components (velocity decomposition) in a configuration in which two squares appear to partially overlap transparently (surface decomposition). In the experiments in which the velocity of the short-lived random dots in the overlapping area was varied, both the velocity decomposition and the surface decomposition were found to be strongest when the velocity of the overlapping area was close to the vector sum of the velocities of random dots in adjacent non-overlapping areas. On the other hand, neither velocity decomposition nor surface decomposition was found either when random dot arrays were put in occlusion configurations or when continuous random dots were used. While previous studies have indicated a one-way influence either from motion to form processing, or from form to motion processing, the present study further suggests that there is a strong reciprocal interaction between motion and form processing. A possibility is that the reciprocal interaction is iterative so that the representations for velocity and surface decomposition are gradually formed.