The constructive nature of perception can be demonstrated under viewing conditions that lead to vivid subjective impressions in the absence of direct input. When a low-contrast moving grating is divided by a large gap, observers report seeing a ‘visual phantom’ of the real grating extending through the blank gap region. Here, we report fMRI evidence showing that visual phantoms lead to enhanced activity in early visual areas that specifically represent the blank gap region. We found that neural filling-in effects occurred automatically in areas V1 and V2, regardless of where the subject attended. Moreover, when phantom-inducing gratings were paired with competing stimuli in a binocular rivalry display, subjects reported spontaneous fluctuations in conscious perception of the phantom accompanied by tightly coupled changes in early visual activity. Our results indicate that phantom visual experiences are closely linked to automatic filling-in of activity at the earliest stages of cortical processing.