We examined whether interocular inhibition in binocular rivalry could occur at the interocular intersection of horizontal and vertical rectangular patches which are locally fusible but globally rivalrous between the two eyes. We measured contrast increment (and decrement) thresholds of a monocularly presented probe which was presented on the horizontal patch corresponding to the intersection. We found that the threshold was higher when the horizontal patch was perceptually suppressed than when it was dominant. In addition, threshold elevation did not occur when both patches were dominant, or when the horizontal patch was viewed in isolation. These results indicate that interocular inhibition occurs at the potentially fusible region, and the determination of binocular fusion or binocular rivalry does not depend on physical stimulus but rather perceptual state at the time.