Transcranial magnetic stimulation (TMS) of the occipital lobe is frequently used to induce visual percepts by direct stimulation of visual cortex. The threshold magnetic field strength necessary to elicit a visual percept is often regarded as a measure of electrical excitability of visual cortex. Using single-pulse TMS during visual motion stimulus presentation, we investigated the relationship between different degrees of visual cortical preactivation and cortical phosphene threshold (PT). The two possible, mutually exclusive, predictions on the outcome of this experiment were that a) PT increases with stronger preactivation because of a decrease in the signal-to-noise ratio, or b) that PT decreases with increased preactivation because of the increase in neuronal response towards some threshold. PTs for single-pulse stimulation of the occipital lobe were determined for eight subjects while they passively viewed a horizontally drifting luminance-modulated sinewave grating. Gratings used were of four different luminance contrasts while the spatial and temporal frequencies remained constant. PTs were shown to increase significantly as the background grating increased in contrast. These results suggest that the neural activity underlying the perception of a phosphene can be considered a type of signal that can be partially masked by another signal, in this case the visual cortical activation produced by passive viewing of drifting gratings.