Visual perception is a creative process. An elaborate hierarchy of interconnected areas processes visual information, while incorporating predictions about the visual scene. How the brain creates the perceptually stable images, is a central question in the field of Neuroscience. This thesis was aimed at addressing fundamental questions on the organizational and computational principles of the visual cortex. We utilized a range of genetic tools, physiological recording techniques, computational procedures, and psychophysics methods to measure and manipulate neuronal activity in behaving mice. A long-standing argument questioning the transferability of research insights from the mouse to human vision has been that the mouse retina lacks a fovea. We demonstrated that the representation of space in mouse visual cortex resembles that in humans in a previously unforeseen manner. We measured cortex-wide population receptive-fields (pRFs) and discovered a region directly in front of, and slightly above the mouse with considerably smaller pRFs, called the ‘focea’. The decrease in pRF size in the focea was not caused by smaller receptive fields (RF) of individual neurons. Instead, a more orderly representation of space and an over-representation of binocular regions cause reduced pRF sizes in the focea. Using behavioral paradigms, we showed that mice have improved visual resolution in the focea and that mice make compensatory eye movements to stabilize this region. These experiments advance our knowledge about organizational principles of the mouse visual system and have important implications for the translatability of research on mouse vision. After examining organizational principles of the visual system, we explored functional properties of the visual cortex, investigating the neural circuits underlying perceptual organization. Perceptual organization describes the grouping of image elements that belong to the same object and segregating these from the (irrelevant) background. It has been shown that the activity of neurons is elevated when their RF lies on a perceptually interesting area, a figure. This phenomenon is known as figure-ground modulation and has been extensively studied in primates. We adapted the paradigm for mice and performed causal tests to probe whether the figural response enhancement in V1 was necessary for perception. We demonstrated that the delayed processing phase, which is dominated by feedback, is crucial for figure-ground perception. We showed that figures elicit stronger activity than the background in multiple higher visual areas, and that this extra activity is fed back to enhance the V1 figure representation. Within V1, figures increased the activity of pyramidal neurons, PV- and VIP-neurons, but decreased the activity of SST-interneurons. This suggests that feedback drives VIP-neurons, which in turn inhibit SST-neurons to disinhibit the cortical column, resulting in an enhanced V1 figure representation. We confirmed the involvement of this disinhibitory microcircuit through optogenetic manipulation of VIP-neuron activity. These results elucidate the neuronal mechanisms for figure-ground modulation and demonstrate how it contributes to perception. In another study, we showed that V1 neurons were robustly activated by stimuli that did not impinge on the classical RF. This purely contextual activation was delayed relative to onset latencies when the RF was stimulated, and the response was strongest in the feedback recipient layers of V1. The three main classes of interneurons were differentially activated, with particularly strong drive of VIP-neurons and weak activation of SST-neurons. Using optogenetics, we identified a VIP-mediated disinhibitory circuit to be involved in generating contextual signals. Finally, we established a relation between contextual drive and the perceptual interpretation of the visual scene. These results provided new insights in the mechanisms for contextual activation in V1. In summary, the experiments described in this thesis examined organizational and functional principles of sensory processing and emphasize the fundamental role of feedback processing in constructing visual experiences.