The term compound letter refers to a large (global) letter made up of small (local) letters. Reaction time to identify local letters is longer when local and global letters are different than when they are the same (the global dominance effect). The possible contribution of lateral masking to this effect was investigated. Lateral masking denotes reduced probability of identifying a stimulus when it is closely surrounded by other stimuli (as is the case for the local items in a compound stimulus). Three experiments were conducted in which the dependent measure was percentage of correct responses, rather than reaction time. In experiment 1 compound letters were used; accuracy of performance yielded evidence of global dominance such as obtained with reaction time measures. In experiments 2 and 3 the strength of lateral masking in geometrical forms was varied by varying the density of their component items. In agreement with earlier suggestions based on indirect evidence, the results directly implicated lateral masking as an important determinant of global dominance. However, lateral masking could not account fully for the experimental outcome. Factors beyond lateral masking, such as global precedence in the processing sequence or inhibitory interactions among low and high spatial-frequency components of the compound images are required in order to provide a comprehensive account of global dominance effects.