Perceptual organization can be viewed as the selection of the best or "most reasonable" parse of a given scene. However, the principles that determine which interpretation is most reasonable have resisted most attempts to define them formally. This paper summarizes a formal theory of human perceptual organization, called minimal model theory, in which the best interpretation of a given scene is expressed as the formally minimal interpretation in a well-defined space of possible interpretations. We then focus specifically on the role of types of grouping units, in particular the difficult notion of "object". Although grouping is often thought of as the process of dividing the image into objects, most research in perceptual grouping actually focuses on simpler types of units, such as contours and surfaces. Minimal model theory characterizes grouping units at a logical level, demonstrating how formal assumptions about units induce the observer to place a certain preference ranking on interpretations. The theory is then applied to the more subtle problem of objects, culminating in a definition for objects that is formally rigorous but at the same time captures some of the flexibility of human intuitions about objects. (C) 1999 Elsevier Science B.V. All rights reserved. PsycINFO classification. 2323.