Prior knowledge facilitates our perception and goal-directed behaviors, particularly when sensory input is lacking or noisy. However, the neural mechanisms underlying the improvement in sensorimotor behavior by prior expectations remain unknown. In this study, we examine the neural activity in the middle temporal (MT) area of visual cortex while monkeys perform a smooth pursuit eye movement task with prior expectation of the visual target's motion direction. Prior expectations discriminately reduce the MT neural responses depending on their preferred directions, when the sensory evidence is weak. This response reduction effectively sharpens neural population direction tuning. Simulations with a realistic MT population demonstrate that sharpening the tuning can explain the biases and variabilities in smooth pursuit, suggesting that neural computations in the sensory area alone can underpin the integration of prior knowledge and sensory evidence. State-space analysis further supports this by revealing neural signals of prior expectations in the MT population activity that correlate with behavioral changes.