Timing emerges from a hierarchy of computations ranging from early encoding of physical duration (time sensation) to abstract time representations (time perception) suitable for storage and decisional processes. However, the neural basis of the perceptual experience of time remains elusive. To address this, we dissociate brain activity uniquely related to lower-level sensory and higher-order perceptual timing operations, using event-related fMRI. Participants compared subsecond (500 msec) sinusoidal gratings drifting with constant velocity (standard) against two probe stimuli: (1) control gratings drifting at constant velocity or (2) accelerating gratings, which induced illusory shortening of time. We tested two probe intervals: a 500-msec duration (Short) and a longer duration required for an accelerating probe to be perceived as long as the standard (Long—individually determined). On each trial, participants classified the probe as shorter or longer than the standard. This allowed for comparison of trials with an “Objective” (physical) or “Subjective” (perceived) difference in duration, based on participant classifications. Objective duration revealed responses in bilateral early extrastriate areas, extending to higher visual areas in the fusiform gyrus (at more lenient thresholds). By contrast, Subjective duration was reflected by distributed responses in a cortical/subcortical areas. This comprised the left superior frontal gyrus and the left cerebellum, and a wider set of common timing areas including the BG, parietal cortex, and posterior cingulate cortex. These results suggest two functionally independent timing stages: early extraction of duration information in sensory cortices and Subjective experience of duration in a higher-order cortical–subcortical timing areas.