Prior research indicates that, like adults, infants use enclosed regions to group elements. It is not clear whether infants or adults can use regions that have to be inferred from illusory contours to group elements. We examined whether 3- to 4-month-olds use illusory regions to group elements and generalize this organization to novel regions. Infants habituated to pairs of shapes in illusory vertical or horizontal regions subsequently discriminated, in novel regions, pairs of elements that had previously shared a region from pairs of elements that had been in different regions. A control group of infants, who had experienced the same stimuli except for the presence of illusory regions, failed to discriminate between within-region and between-region pairs of stimuli. These results reveal that (1) illusory regions can be used to group elements, (2) perceptual organization is sufficiently developed early in life for 3- to 4-month-olds to group on the basis of ecologically relevant illusory contours, and (3) such grouping in infancy generalizes to novel regions.