The perceived color of a light depends on surrounding light. When the surround varies slowly over time, a central, physically steady light is perceived to vary also. This perceived temporal variation of the central region, however, is strongly attenuated when the surround varies faster than ~3 Hz (R. L. De Valois, M. A. Webster, K. K. De Valois, & B. Lingelbach, 1986). The classical explanation is low-pass temporal filtering at a cortical stage that attenuates the neural representation of temporal frequencies capable of causing induced temporal variation. This theory assumes neural responses are linear, so only temporal frequencies in the stimulus are represented in the neural response. The current experiments revealed that temporal frequencies above 3 Hz are capable of inducing temporal variation. Specifically, with two temporal frequencies superimposed in the surround, the induced temporal variation in the uniform region is at the difference frequency of these two frequencies, even though this frequency is not physically present in the stimulus. The results are accounted for by a nonlinear neural process, which causes temporal variation at the difference frequency, and a following linear temporal filter.