Our recent research with compound stimuli (Han, Humphreys, & Chen, 1999a) suggests that grouping between local elements facilitates the perception of global structure, whereas encoding closure in local elements enhances their segmentation. The present study presents further evidence supporting this assertion. Experiment 1 first developed a new paradigm in which grouping between local elements was manipulated. Subjects responded to the orientations of perceptual groups consisting of local arrows or triangles embedded in background crosses. Responses to the orientations of the groups were slowed as a function of the increased contrast of the crosses, indicating that the strength of grouping between local arrows or triangles was gradually weakened by increasing the contrast of the crosses. Using a similar paradigm, Experiments 2 and 3 investigated the role of Gestalt factors in hierarchical analysis. Global arrows or triangles made up of local arrows, or triangles were embedded in background crosses. Subjects responded to global or local stimuli in terms of orientation or closure. Increasing the contrast of the background crosses produced stronger effects on global responses than on local responses and resulted in elimination of the global precedence effect and emerging of a local precedence effect, which was stronger for closure discrimination than for orientation discrimination. These results provide new evidence supporting our previous claim about the role of Gestalt factors in hierarchical analysis.