We investigated how the primate visual system solves the difficult problem of representing multiple motion vectors in the same part of the visual space--the problem of motion transparency. In the preceding companion article we reported that displays with locally well-balanced motion signals in opposite directions are perceptually nontransparent (i.e., one does not see two coherent moving surfaces) and that transparent displays always contain locally unbalanced motion signals. This is exemplified by our paired and unpaired dot patterns. Although both types of stimuli contain two sets of dots moving in opposite directions, the former is locally well balanced and appears like flicker while the latter gives a perception of two transparent surfaces. In this article we report our physiological recordings from areas V1 and MT of behaving monkeys, comparing single-cell responses to the paired and the unpaired dot patterns. Although a small proportion of directionally selective V1 cells responded differently to the two types of patterns, the average V1 responses could not reliably distinguish between the paired and the unpaired stimuli. A large fraction of MT cells, on the other hand, responded significantly better to the unpaired dot patterns than to the paired ones. Furthermore, the average response of all MT cells to the unpaired dot patterns was significantly higher than that to the paired dot patterns. These results demonstrate a neural correlate of the perceptual transparency at the level of MT. On the other hand, V1 cells do not generally discriminate between the transparent and nontransparent stimuli, indicating that V1 activity is not well correlated with the perception of motion transparency. Our results are consistent with a two-stage model for motion processing: the first stage measures local motion and the second stage introduces suppression if different directions of motion are present at a local region of the visual field. The first stage is located primarily in V1 and the second stage primarily in MT. Finally, we found a strong and negative correlation between the degree of the opponent-direction suppression of MT cells and their responses to flicker noise stimuli. This result suggests that one of the fundamental roles of the opponent-direction suppression in MT is noise reduction.