In the phantom illumination illusion, luminance ramps ranging from black to white induce a brightness enhancement on an otherwise homogeneous dark background. The strength of the illusion was tested with regard to the extension of the brightness inducing perimeter, surrounding the target area by manipulating the number of inducers (exp. 1) and the size of the inducers (exp. 2). Participants' task was to rate the difference in brightness between the target area and the background. Results show that the illusion occurs only when the target area is not completely segregated from the background by luminance ramps; vice versa, when the target area is delimited by a continuous gradient, it appears darker than the background. These findings suggest a major role of figure-ground organization in the appearance of the illusion. This hypothesis was tested in a rating task experiment with three types of target area shapes circumscribed by four types of edges: luminance contours, illusory contours, no contours, and ambiguous contours. Illusory contours, just as luminance contours, hinder the illusion and produce a darkening of the target area. A control experiment measured the brightness of the previous stimuli without luminance ramps: all configurations resulted in a darkening of the target area. Results from all experiments suggest that figure-ground segmentation plays a major role in the determination of both illumination and lightness in stimuli with luminance gradients.