We used a dual-masking paradigm to study how contrast discrimination is influenced by the presence of adjacent stimuli differing in orientation. The task of the observer was to detect a vertical Gabor target superimposed on a vertical Gabor pedestal in the presence of flankers. The Gabor flankers had orientations ranging from 0 degrees (parallel to the target) to 90 degrees (orthogonal). The flankers had two different facilitatory effects: (a) Threshold facilitation. The flankers facilitated target detection at low pedestal contrasts. This facilitation was narrowly tuned to flanker orientation. (b) Pedestal enhancement. The flankers at high contrast enhanced the masking effectiveness of the pedestal. This pedestal enhancement changed little with flanker orientation. We fitted the data with a sensitivity modulation model in which the flanker effects were implemented as multiplicative factors modulating the sensitivity of the target mechanism to both excitatory and inhibitory inputs. The model parameters showed that, (a) pedestal enhancement occurs when flanker facilitation to the pedestal is greater than to the target; (b) while the sensitivity modulation was tuned sharply with flanker orientation, the ratio between the excitatory and the inhibitory factors remained constant. The explanation of the flanker orientation effect requires the both the values of each factor and the ratio between them.