Optical see-through Augmented Reality (OST-AR) is a developing technology with exciting applications including medicine, industry, education, and entertainment. OST-AR creates a mix of virtual and real using an optical combiner that blends images and graphics with the real-world environment. Such an overlay of visual information is simultaneously futuristic and familiar: like the sci-fi navigation and communication interfaces in movies, but also much like banal reflections in glass windows. OSTAR’s transparent displays cause background bleed-through, which distorts color and contrast, yet virtual content is usually easily understandable. Perceptual scission, or the cognitive separation of layers, is an important mechanism, influenced by transparency, depth, parallax, and more, that helps us see what is real and what is virtual. In examples from Pepper’s Ghost, veiling luminance, mixed material modes, window shopping, and today’s OST-AR systems, transparency and scission provide surprising – and ordinary – results. Ongoing psychophysical research is addressing perceived characteristics of color, material, and images in OST-AR, testing and harnessing the perceptual effects of transparency and scission. Results help both understand the visual mechanisms and improve tomorrow’s AR systems.