When a moving object cuts in front of a moving observer at a 90° angle, the observer correctly perceives that the object is traveling along a perpendicular path just as if viewing the moving object from a stationary vantage point. Although the observer's own (self-)motion affects the object's pattern of motion on the retina, the visual system is able to factor out the influence of self-motion and recover the world-relative motion of the object (Matsumiya and Ando, 2009). This is achieved by using information in global optic flow (Rushton and Warren, 2005; Warren and Rushton, 2009; Fajen and Matthis, 2013) and other sensory arrays (Dupin and Wexler, 2013; Fajen et al., 2013; Dokka et al., 2015) to estimate and deduct the component of the object's local retinal motion that is due to self-motion. However, this account (known as "flow parsing") is qualitative and does not shed light on mechanisms in the visual system that recover object motion during self-motion. We present a simple computational account that makes explicit possible mechanisms in visual cortex by which self-motion signals in the medial superior temporal area interact with object motion signals in the middle temporal area to transform object motion into a world-relative reference frame. The model (1) relies on two mechanisms (MST-MT feedback and disinhibition of opponent motion signals in MT) to explain existing data, (2) clarifies how pathways for self-motion and object-motion perception interact, and (3) unifies the existing flow parsing hypothesis with established neurophysiological mechanisms. To intercept targets, we must perceive the motion of objects that move independently from us as we move through the environment. Although our self-motion substantially alters the motion of objects on the retina, compelling evidence indicates that the visual system at least partially compensates for self-motion such that object motion relative to the stationary environment can be more accurately perceived. We have developed a model that sheds light on plausible mechanisms within the visual system that transform retinal motion into a world-relative reference frame. Our model reveals how local motion signals (generated through interactions within the middle temporal area) and global motion signals (feedback from the dorsal medial superior temporal area) contribute and offers a new hypothesis about the connection between pathways for heading and object motion perception.