The current study introduces a new illusion in motion perception. The stimulus is a moving object that is composed of a textured center and a dynamic surround. When viewing this stimulus, subjects perceive the textured center as moving slower than the dynamic background (i.e. a perceptual lag). In a series of experiments, we investigated the possible underlying mechanism behind this phenomenon. The motion of the slow moving textured center can be decomposed into a first order motion signal (motion of the center texture) and a second order motion signal (the moving boundary between the textured center and the dynamic noise). Potentially, the illusion could arise from a failure of first order motion system to properly estimate the velocity, a failure of the second order motion velocity estimate, or some combination of the two. Subjects performed a velocity-matching task for three types of moving stimuli: motion of the texture (first order), motion of the boundary (second order), and motion of both the texture and the boundary (combination of first order and second order). Subjects were found to be accurate in the velocity estimation of the first order stimuli. In the second order condition, subjects perceived the stimulus to be moving substantially slower than the true velocity. The perceived velocity of the stimulus with combined first and second order motion signal was found to be in between the two. The results of our experiments suggest that to compute perceived velocity, our visual system integrates first and second order motion information when both are available. Interestingly, this motion cue combination occurs even when the second order motion signal provides inaccurate velocity information. Given both an accurate first order velocity estimate and an inaccurate second-order velocity estimate, the second order motion signal is not treated as second class.