The perceived position of a moving object can be misleading because the obj
ect has advanced while its previous retinal image has been transmitted thro
ugh the visual stream, leading to a mismatch between actual location and it
s neural representation. It has been suggested that the human visual system
compensates for neural processing delays to retrieve instantaneous positio
n. However, such a mechanism would require a precise measure of the actual
delay in order to provide a reliable position estimate. A novel illusory de
formation of moving contours demonstrates that humans misjudge the spatial
relationship between parts of coherently moving targets, and therefore do n
ot perfectly account for neural delays. The size of this deformation increa
ses with growing speed. In some subjects this illusion can be reversed by v
arying the luminance of individual dots; a manipulation that affects the ne
ural delays. Our experiments agree with other evidence that the capacity of
the visual system to compensate for processing delays is limited.