Despite extensive evidence of the possible interactions between multisensory signals, it remains unclear at what level of sensory processing these interactions take place. When two identical auditory beeps (inducers) are presented in quick succession accompanied by a single visual flash, observers often report seeing two visual flashes, rather than the physical one — the double flash illusion. This compelling illusion has often been considered to reflect direct interactions between neural activations in different primary sensory cortices. Against this simple account, here we show that by simply changing the inducer signals between featurally distinct signals (e.g. high- and low-pitch beeps) the illusory double flash is abolished. This result suggests that a critical component underlying the illusion is perceptual grouping of the inducer signals, consistent with the notion that multisensory combination is preceded by determination of whether the relevant signals share a common source of origin.