Familiarity with a stimulus leads to an attenuated neural response to the stimulus. Alongside this attenuation, recent studies have also observed a truncation of stimulus-evoked activity for familiar visual input. One proposed function of this truncation is to rapidly put neurons in a state of readiness to respond to new input. Here, we examined this hypothesis by presenting human participants with target stimuli that were embedded in rapid streams of familiar or novel distractor stimuli at different speeds of presentation, while recording brain activity using magnetoencephalography and measuring behavioral performance. We investigated the temporal and spatial dynamics of signal truncation and whether this phenomenon bears relationship to participants' ability to categorize target items within a visual stream. Behaviorally, target categorization performance was markedly better when the target was embedded within familiar distractors, and this benefit became more pronounced with increasing speed of presentation. Familiar distractors showed a truncation of neural activity in the visual system. This truncation was strongest for the fastest presentation speeds and peaked in progressively more anterior cortical regions as presentation speeds became slower. Moreover, the neural response evoked by the target was stronger when this target was preceded by familiar distractors. Taken together, these findings demonstrate that item familiarity results in a truncated neural response, is associated with stronger processing of relevant target information, and leads to superior perceptual performance.

Prior knowledge about the visual world can change how a visual stimulus is processed. Two forms of prior knowledge are often distinguished: stimulus familiarity (i.e., whether a stimulus has been seen before) and stimulus expectation (i.e., whether a stimulus is expected to occur, based on the context). Neurophysiological studies in monkeys have shown suppression of spiking activity both for expected and for familiar items in object-selective inferotemporal cortex. It is an open question, however, if and how these types of knowledge interact in their modulatory effects on the sensory response. To address this issue and to examine whether previous findings generalize to noninvasively measured neural activity in humans, we separately manipulated stimulus familiarity and expectation while noninvasively recording human brain activity using magnetoencephalography. We observed independent suppression of neural activity by familiarity and expectation, specifically in the lateral occipital complex, the putative human homologue of monkey inferotemporal cortex. Familiarity also led to sharpened response dynamics, which was predominantly observed in early visual cortex. Together, these results show that distinct types of sensory knowledge jointly determine the amount of neural resources dedicated to object processing in the visual ventral stream.