In a complex acoustic environment, acoustic cues and attention interact in the formation of streams within the auditory scene. In this study, a variant of the "octave illusion" [Deutsch (1974). Nature 251, 307-309] was used to investigate the neural correlates of auditory streaming, and to elucidate the effects of attention on the interaction between sequential and concurrent sound segregation in humans. By directing subjects' attention to different frequencies and ears, it was possible to elicit several different illusory percepts with the identical stimulus. The first experiment tested the hypothesis that the illusion depends on the ability of listeners to perceptually stream the target tones from within the alternating sound sequences. In the second experiment, concurrent psychophysical measures and electroencephalography recordings provided neural correlates of the various percepts elicited by the multistable stimulus. The results show that the perception and neural correlates of the auditory illusion can be manipulated robustly by attentional focus and that the illusion is constrained in much the same way as auditory stream segregation, suggesting common underlying mechanisms.