A new illusion is described. Randomly positioned dots moved radially within an imaginary annular window. The dots’ motion periodically changed the direction, leading to an alternating percept of expanding and contracting motion. Strikingly, the apparent size of the enclosed circular region shrank during the dots’ expanding phases and dilated during the contracting phases. We quantitatively measured the illusion, and found that the presence of energy at the local kinetic edge could not account for the illusion. Besides, we reproduced the illusion on a natural scene background seen from a first-person point of view that moved forward and backward periodically. Blurring the boundaries of motion areas could not reverse the illusion in all subjects. Taken together, our observed illusion is likely induced by optic flow processing with some components of motion contrast. Expanding or contracting dots may induce the self-motion perception of either approaching or leaving way from the circle. These will make the circle appear smaller or larger since its retinal size remains constant.