We investigated lateral modulation effects with functional magnetic resonance imaging. We presented radial sinusoidal gratings in random sequence: a scotoma grating with two arc-shaped blank regions (scotomata) in the periphery, one in the left and one in the right visual field, a center grating containing pattern only in the scotoma regions, and a full-field grating where the pattern occupied the whole screen. On each trial, one of the three gratings flickered in counterphase for 10 s, followed by a blank period. Observers were instructed to perform a fixation task and report whether filling-in was experienced during the scotoma condition. The results showed that the blood-oxygen-level-dependent signal was reduced in areas corresponding to the scotoma regions in the full-field compared to the center condition in V1 to V3 areas, indicating a lateral inhibition effect when the surround was added to the center pattern. The univariate analysis results showed no difference between the filling-in and no-filling-in trials. However, multivariate pattern analysis results showed that classifiers trained on activation pattern in V1 to V3 could differentiate between filling-in and no-filling-in trials, suggesting that the neural activation pattern in visual cortex correlated with the subjective percept.