Single-letter visual acuity is impaired by nearby flanking stimuli, a phenomenon known as contour interaction. We showed previously that when foveal acuity is degraded by a reduction of letter contrast, both the magnitude and angular spatial extent of foveal contour interaction remain unchanged. In this study, we asked whether contour interaction also remains unchanged when foveal visual acuity is degraded by a reduction of the target's background luminance.Percent correct letter identification was measured for isolated, near-threshold black Sloan letters and for letters surrounded by 4 flanking bars in 10 normal observers, 5 at Anglia Ruskin University, UK (ARU) and 5 at Palacky University, Czech Republic (PU). A stepwise reduction in the background luminance over 3 log units resulted in an approximately threefold increase in the near-threshold letter size. At each background luminance, black flanking bars with a width equal to 1 letter stroke were presented at separations between approximately 0.45 and 4.5. min arc (ARU) or 0.32 and 3.2. min arc (PU).The results indicate that the angular extent of contour interaction remains unchanged at approximately 4. min arc at all background luminances. On the other hand, the magnitude of contour interaction decreases systematically as luminance is reduced, from approximately a 50% reduction to a 30% reduction in percent correct. The constant angular extent and decreasing magnitude of contour interaction with a reduction of background luminance suggest foveal contour interaction is mediated by luminance-dependent lateral inhibition within a fixed angular region.