Visual hallucinations are a common, distressing, and disabling symptom of Lewy body and other diseases. Current modelssuggest that interactions in internal cognitive processes generate hallucinations. However, these neglect external factors.Pareidolic illusions are an experimental analogue of hallucinations. They are easily induced in Lewy body disease, havesimilar content to spontaneous hallucinations, and respond to cholinesterase inhibitors in the same way. We used aprimed pareidolia task with hallucinating participants with Lewy body disorders (n = 16), non-hallucinating participantswith Lewy body disorders (n = 19), and healthy controls (n = 20). Participants were presented with visual “noise” thatsometimes contained degraded visual objects and were required to indicate what they saw. Some perceptions werecued in advance by a visual prime. Results showed that hallucinating participants were impaired in discerning visualsignals from noise, with a relaxed criterion threshold for perception compared to both other groups. After thepresentation of a visual prime, the criterion was comparable to the other groups. The results suggest that participantswith hallucinations compensate for perceptual deficits by relaxing perceptual criteria, at a cost of seeing things that arenot there, and that visual cues regularize perception. This latter finding may provide a mechanism for understanding theinteraction between environments and hallucinations.