Psychophysical experiments suggest that colour contrast and colour induction by surround lights can be explained as brightness contrasts (darkness induction) in the spectral region of the surround colour. It follows from this model that a chromatic surround reduces the gain of receptor-ganglion cell channels if the surround colour is in their excitatory spectral region. Thus, a green-sensitive cell (G+/R- or WS in our nomenclature) would respond less to a blue-green stimulus flashed into its receptive field when the surround (5 degrees/20 degrees inner/outer diameter) is illuminated with blue light. Neurophysiological experiments show that this is indeed the case and that such surround-induced response changes are present already in relay cells of the parvocellular layers of the lateral geniculate nucleus (P-LGN) and their retinal afferents. These surround-induced response changes are in qualitative and quantitative agreement with psychophysical experiments. Since the neuronal signal for white consists of a balanced excitation of the M-cone excited, green-blue-sensitive WS-cells and the L-cone excited, yellow-red-sensitive WL-cells, the findings also explain colour induction on white surfaces as well as coloured shadows: during blue surround illumination, white signals from the WS-cells, and during red surround the white signals from the WL-cells are reduced. The neurophysiological surround effects on P-LGN cells are identical but weaker than those produced by light of the same colour shone into the receptive field centres. They are therefore undistinguishable from direct adaptation of those receptors which feed directly into the receptive field of the respective cells. This suggests that they are caused by scattered light reaching the receptive field from the surround.