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Psychophysical studies point to the existence of specialized mechanisms sensitive to the relative motion between an object and its background. Such mechanisms would seem ideal for the motion-based segmentation of objects; however, their properties and role in processing the visual scene remain unclear. Here we examine the contribution of relative motion mechanisms to the processing of object trajectory. In a series of four psychophysical experiments we examine systematically the effects of relative direction and speed differences on the perceived trajectory of an object against a moving background. We show that background motion systematically influences the discrimination of object direction. Subjects’ ability to discriminate direction was consistently better for objects moving opposite a translating background than for objects moving in the same direction as the background. This effect was limited to the case of a translating background and did not affect perceived trajectory for more complex background motions associated with self-motion. We interpret these differences as providing support for the role of relative motion mechanisms in the segmentation and representation of object motions that do not occlude the path of an observer’s self-motion.